Auto sales tally for 2016 will be a squeaker – USA TODAY
No matter how auto sales turn out when they are reported Wednesday, it’s going to be a squeaker.
The auto industry is on the cusp of reporting another record year, perhaps topping 17.5 million new vehicles sold in the U.S. But the numbers are so close that forecasters are divided on the prospect.
The focus is turning, instead, to 2017 to see whether the industry can reignite sales growth based on consumer optimism, a rising stock market and a healthy housing market.
“Retail automotive sales continue at a blistering pace, giving the auto industry plenty to celebrate as we close out the year,” says Eric Lyman, chief industry analyst for ALG, a consulting firm that tracks auto values and sales, in a statement.
Other auto industry analysts aren’t as bullish. They point to rising interest rates, lower trade-in values and potentially tighter financing as proof the end of the long cycle of rising auto sales is nearing an end, just in time for 2017.
“The game isn’t over, but it looks like we’re in the fourth quarter and the clock is ticking,” wrote Morgan Stanley analyst Adam Jonas in a Dec. 22 note.
At the end of November, the industry was up only 0.1% on sales for the first 11 months of the year. That’s only a difference of 20,139 vehicles out of 15,859,922 sold, Autodata reports.
But automakers weren’t holding back in December when it came to the final sales push. The promotions and advertising budgets were being blown out in order to squeeze out every last sale.
Experts for ALG and another industry tracker, Kelley Blue Book, think that a sales run that started in 2009 when the industry hit a recessionary annual bottom of 10.4 million new vehicles sold will come to an end for 2016. Analysts at Edmunds.com. an auto sales website, by contrast, thinks the industry will hit a new record – barely.
“Dealers and automakers are hustling to squeeze out just enough units to set an annual record,” says Jeremy Acevedo, a senior analyst for Edmunds.com in a statement. “It’s shaping up to be a true photo finish.”
One way that automakers can goose sales: discounting. ALG says automakers were offering an average of $3,673 per vehicle in sales incentives in December, up a whopping 19.9% from a year ago.
Automakers “have shown greater willingness to use incentives to drive growth,” Barclays analyst Brian Johnson wrote in a note to investors Wednesday.