U.S. Auto Industry on Pace for Worst First Half Since 2014
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U.S. Auto Industry on Pace for Worst First Half Since 2014

A pullback in fleet volume is crimping U.S. light-vehicle sales, according to J.D. Power and LMC Automotive.

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A pullback in fleet volume is crimping U.S. light-vehicle sales, according to J.D. Power and LMC Automotive.

June total vehicle sales are expected to be 1.48 million units, down 2.3 percent from June 2016. June retail vehicle sales are projected to be 1.17 million units, down 1.3 percent from June 2016 and the lowest since 2012.

For the first half of 2017, the firms expect retail sales to be 1 percent lower than last year.

“The auto industry is pacing towards its weakest first half since 2014,” said Deirdre Borrego, senior vice president of automotive data and analytics at J.D. Power. “While the retail selling rate has declined in four of the first six months, the broader concern remains the negative health indicators behind the sales results.”

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To counter the slowdown, the automakers have their foot on the gas for consumer incentives: Total incentive spending in the marketplace has risen to a record $25.2 billion through June, up 11.7 percent from last year.

“As the U.S. auto market enters the fourth month in a row of a sub-17-million-unit selling rate, nerves are being tested,” said Jeff Schuster, senior vice president of forecasting at LMC Automotive. “The primary driver of the decline in the total sales pace is a pullback in fleet volume, which are projected to be down 8 percent for the first half of 2017, while retail sales, assisted by elevated incentives, are projected to contract by 0.6 percent for the same period.

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“It will be challenging in the second half of the year to keep pace with 2016, so some additional weakness and further risk are expected in both fleet and retail volume. But a year still expected above 17 million units should not be considered a poor performance.”

The prolonged pullback in fleet volume combined with the leveling off of the retail market has led to another trimming of the outlook for 2017.

LMC has cut its 2017 forecast for total light-vehicle sales to 17.1 million units, down from 17.2 million last month and a decline of 2.6 percent from 2016.

 

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