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The Run of Near-Record Sales Appears to be Ending
William Maley posted an article in Automotive Industry
2018 saw a continuation of near-record sales and large profits for automakers in the U.S., but that appears to be coming to an end. Bloomberg reports various factors are conspiring to end this trend such as increasing interest rates and the average price of a new vehicle hitting record highs. While some may point out that 2018 saw a 0.3 percent increase in vehicle deliveries (17.6 million according to AutoData), analysts point that this is due to the tax cuts brought by President Donald Trump last year and automakers selling more vehicles to fleets. Charlie Chesbrough, senior economist at Cox Automotive said that the big U.S. automakers saw deliveries fall at a faster rate "in the last three months of the year than for all of 2018." "For some automakers, the slowdown has already begun,” said Chesbrough. Look at General Motors as an example. For the fourth quarter, GM reported a 2.7 percent drop in sales - 785,229 vs. 806,739 for 2017. “We’ve had a gradually declining trend on retail even with the tax changes. That’s the kind of trajectory we would anticipate given continued headwinds on the economic side,” said Emily Kolinski Morris, Ford’s chief economist. What are we expecting in terms of sales for the coming year? It seems everyone agrees that it will be at or under 17 million vehicles, but estimates vary widely with one predicting 16.5 million due to reductions in fleet purchases. Executives are quick to caution that sales won't implode this year. Scott Keogh, president and chief executive officer of Volkswagen of America said on a conference call that unemployment is low and consumer confidence is high. But the issue uncertainty with Keogh saying consumers are watching "interest rates rise and are wary of what’s been a volatile stock market of late." “When the headlines say that the market has had the worst falloff since 2008, that will rattle consumer confidence,” he said. Source: Bloomberg (Subscription Required) -
2018 saw a continuation of near-record sales and large profits for automakers in the U.S., but that appears to be coming to an end. Bloomberg reports various factors are conspiring to end this trend such as increasing interest rates and the average price of a new vehicle hitting record highs. While some may point out that 2018 saw a 0.3 percent increase in vehicle deliveries (17.6 million according to AutoData), analysts point that this is due to the tax cuts brought by President Donald Trump last year and automakers selling more vehicles to fleets. Charlie Chesbrough, senior economist at Cox Automotive said that the big U.S. automakers saw deliveries fall at a faster rate "in the last three months of the year than for all of 2018." "For some automakers, the slowdown has already begun,” said Chesbrough. Look at General Motors as an example. For the fourth quarter, GM reported a 2.7 percent drop in sales - 785,229 vs. 806,739 for 2017. “We’ve had a gradually declining trend on retail even with the tax changes. That’s the kind of trajectory we would anticipate given continued headwinds on the economic side,” said Emily Kolinski Morris, Ford’s chief economist. What are we expecting in terms of sales for the coming year? It seems everyone agrees that it will be at or under 17 million vehicles, but estimates vary widely with one predicting 16.5 million due to reductions in fleet purchases. Executives are quick to caution that sales won't implode this year. Scott Keogh, president and chief executive officer of Volkswagen of America said on a conference call that unemployment is low and consumer confidence is high. But the issue uncertainty with Keogh saying consumers are watching "interest rates rise and are wary of what’s been a volatile stock market of late." “When the headlines say that the market has had the worst falloff since 2008, that will rattle consumer confidence,” he said. Source: Bloomberg (Subscription Required) View full article
