USA TODAY International Edition
Auto sales recede: Cars ailing, crossovers booming
Sputtering car sales are finally backing up the auto industry.
Fueled almost entirely by plunging sales of small cars and sedans, a steady decline in U. S. auto sales in the first half of 2017 promises to end the auto industry’s two- year streak of record sales.
Barring a sudden, unexpected surge in the second half, the industry will back up slightly from 2016’ s record of 17.6 million units sold.
“Clearly we have an industry that has peaked,” said Mark LaNeve, Ford’s vice president of sales. But it’s still “a very good industry.”
Auto sales fell 2.1% through the first six months of 2017, compared to the same period in 2016, according to Autodata. June sales reported Monday fell 3% from a year earlier, as consumers continued to abandon compact cars and mid- size sedans in favor of crossovers, sport- utility vehicles and pickup trucks.
Analysts at Edmunds. com and Kelley Blue Book had projected industry sales declines of 2.3% and 3.6%, respectively.
“June sales numbers reaffirm that we are in what we’re calling a post- peak phase,” Autotrader. com analyst Michelle Krebs said.
Kelley Blue Book analyst Alec Gutierrez said sales could end up about 17.1 million units for 2017.
An uptick in dealer incentives — including the longest- term loans in the industry’s history, according to Edmunds. com — wasn’t enough to fuel an increase in the first half. Average dis- counts accounted for 10.2% of average prices so far in 2017, compared to 9.8% in 2016, according to Kelley Blue Book. But the automakers are still remaining disciplined by not splashing incentives on all vehicles, Krebs said.
Still, at the current sales pace, automakers are reaping healthy profits as consumers remain confident and gas prices remain low. Prices averaged $ 2.24 per gallon Monday morning, according to GasBuddy, in one factor contributing to the shift from cars into larger vehicles. Design preferences are also contributing, according to industry research, as many Baby Boomers prefer crossovers for their high- riding stature, and Millennials prefer the extra space for their growing families.
Mid- size cars lost 2.2 percentage points in market share in the first half of the year, falling to 10.9%, according to Kelley Blue Book. Meanwhile, mid- size SUVs and crossovers gained 1.4 per- centage points in market share, rising to 12.8%.
Although automakers that bet heavily on cars are suffering losses in that area, the transition to more profitable SUVs and crossovers eases the pain.
“We still believe that 2017 will be another solid year,” Toyota sales chief Bill Fay said.
The trio of automakers traditionally known as the Detroit Three each posted sales declines for first half of 2017. General Motors was down 1.8%, Ford fell 3.8% and Fiat Chrysler declined 6.9%, according to Autodata.
In the first six months of the year, Toyota sales fell 3.6%, Honda fell 0.1% and Nissan rose 2.7%. Red- hot Subaru continued to snap up market share as sales rose 9.1%.