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January 2018 U.S. New Auto Sales Slow after Solid 2017 Close

January 2018 U.S. New Auto Sales Slow after Solid 2017 Close

By Philly Murtha, January 29, 2018
After a sturdy 2017 close-out, it’s no surprise that January new-vehicle sales may dip 3% from the year-ago month, according to an update from J.D. Power and auto forecasting partner LMC Automotive. Total (retail and fleet) sales for the month are set to reach 1.15 million units, off 2.9% from last January’s 1.14 million units when adjusted for one more selling day in January 2018 (25 days) vs. January 2017 (24 days).

Based on sales data collected through the first 16 days of January, and adjusted for one more selling day, the update forecasts that retail sales will dip 2.7%, to 893,900 units vs. 882,402 units a year ago. Fleet deliveries are expected to decline 3.6% from last January and account for 23% of the sales mix.

January is nearly always a transition month, according to Thomas King, J.D. Power senior vice president of Data and Analytics, who said that after a sell-down of old model-year vehicles in December, manufacturers shift their focus towards 2018 vehicles. Through mid-January, 2018 model-year vehicles made up 73% of retail sales—up more than 11 points from December 2016.

It’s noteworthy that the average transaction price so far in January has set a record, rising to $32,169, while incentives continued to fatten to an average $3,733 in the first two weeks of the month, accounting for an average 10% of MSRP. Trucks—pickups and SUVs—dominate, making up 67% of all new-vehicle retail sales through Jan. 21—the highest level for any January.

Despite a weaker January, positive news is likely for 2018 auto sales. Jeff Schuster, LMC Automotive’s vice president of forecasting, said that “the tax cut is expected to help drive the economy toward 3% growth—not seen since 2005.” However, he adds there will be continued pressure from off-lease vehicles coming into the market. Also, he said economic growth could be curbed if the United States withdraws from NAFTA, which could lead to stock market volatility and increases in the cost of consumer goods, including autos, which might weaken demand in the second half of 2018.

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