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U.S. Auto Sales to End 2016 with Vigor; 17.5 Million Unit Sales Within Reach

U.S. Auto Sales to End 2016 with Vigor; 17.5 Million Unit Sales Within Reach

By Philly Murtha, December 22, 2016
New-vehicle sales in the U.S. market are poised to set another record in 2016, according to a December update from J.D. Power and auto forecasting partner LMC Automotive. The full-year sales forecast of 17.5 million units would surpass the total from 2015 by about 5,000 units. Light trucks figure into the upsurge, along with higher incentives—eclipsing $4,000 per vehicle for the first time on record—as automakers clear out 2016 model-year vehicles.

Based on sales data from the first 15 days of December, total (retail and fleet) sales in December may rise 1.4% from a year ago to 1.604 million units on a selling-day adjusted basis. December 2016 has one less selling day than December 2015 (27 days vs. 28 days a year ago). Last year’s December sales total was 1.64 million units.

Retail new car and light-truck sales in December are expected to total 1.333 million units—a slight 0.8% gain from a year ago, when selling-day adjusted. Fleet sales will likely increase 4.8% to 271,700 units, and account for 16.9% of the sales mix this month vs.16.4% last year.

“This year will be remembered for retail sales strength and record transaction prices,” said J.D. Power’s Deirdre Borrego, senior vice president and general manager of automotive data and analytics. However, Borrego cautions, “Elevated inventories, a slow transition to new-model year vehicles, and record incentive levels point to more challenges for the auto industry in 2017.”

In observations about 2016, Jeff Schuster, senior vice president of forecasting at LMC Automotive, said: “2016 should be another record year for light-vehicle sales—but it will be a photo finish.” On account of high incentive levels and fleet volume, there may be some payback in 2017, he said.

Looking ahead, Schuster said positive drivers include a stronger economy with fiscal stimulus and deregulation, along with Volkswagen’s buyback program (after settling its diesel emissions cheating scandal); and a high number of off-lease vehicles entering the market. He sees negative drivers including interest rate increases, potential protectionism, a pullback in incentives, and a rise in used-vehicle substitution for new ones.

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