Car sales cool off despite discounts

January not kind to Detroit’s Big 3

The auto industry stumbled out of the gate last month in its race for a third consecutive year of record sales.

Automakers sold 1.14 million vehicles in the U. S. in January, down 1.8% from a torrential pace in January 2016, according to Autodata. The decline came as the industry tried to keep the momentum going by piling on discounts.

Each of the Detroit Big 3 automakers posted sales declines, with General Motors down 3.9%, Ford settling 0.7% and Fiat Chrysler tumbling 11.2% compared to the same month last year. The next largest automaker, Japan’s Toyota, was pummeled in January, down 11.3%. It badly trailed analyst expectations.

Yet buoyed by consumer confidence amid stock market gains following the presidential election — not to mention easy credit and low gas prices — Americans aren’t hesitating much when it comes to signing papers for a new car.

Kelley Blue Book analyst Alec Gutierrez estimated fullyear 2017 auto sales will cross the 17 million mark this year, just by not as much as in the past two years.

There are warning signs, however. Discounts are creeping up in a sign of rising competitiveness for market share, which could compromise profitability. Average incentives per vehicle totaled $ 3,635 in January, up 21.6% from a year earlier, according to TrueCar subsidiary ALG’s estimates.

“Incentives continue to rise faster than transaction overall,” Gutierrez said. “This is likely being driven by continuing rising inventory levels.”

Easy credit is juicing sales, too. About 10% of all new- car loans in January were interestfree, up from 8% a year earlier, according to Edmunds. com.