Auto sales like to continue falling – USA TODAY
DETROIT — Auto sales, while still high by historic standards, are expected to continue drop in the second half of the year, an auto industry economist says.
Some 8.4 million new vehicles were sold in the first half of the year, down 2.3% compared to the same period last year. The full year forecast is for 17.1 million vehicles to be sold, a drop of 2.5% from 2016’s 17.5 million. That would make it the fifth best year ever.
“We are moving into a ‘post peak’ period for the U.S. auto industry,” said Jonathan Smoke, chief economist for Cox Automotive, parent company of Kelley Blue Book, at an event here.
But despite some challenges, the economy remains in good shape. But households were being socked with higher costs last year for housing, up 19%; taxes, up 10%; auto insurance, up 9%; and debt payments, up 4%.Spending on vehicles was down 5%.
Millennials are becoming an increasingly important part of the market, making up an estimated 40% by 2020. But affordability is a big issue for them, and they are more likely to consider used cars, according to Rebecca Lindland, executive analyst for Kelley Blue Book.
In addition, lots of off-lease vehicles will hit the market as affordable used vehicles. Cox estimated that the number would increase from 3 million in 2016 to 3.6 million this year.
“These off-lease vehicles are rapidly becoming an affordable, appealing alternative to new. More are on the way. By 2020, 4.6 million off-lease vehicles will return to the market,” according to a release.
“The market is chasing Subaru,” said Lindland.
The Japanese automaker is outselling Chrysler, Fiat, Mini, Smart and Volkswagen combined, according to Cox.
Year to date, Subaru is up 0.34% for a 3.64% market share. Cox predicts that Subaru could pass Hyundai in market share (4.08%) by the end of the year.
But Subaru isn’t the only company or brand with a good story to tell.
With a new Rogue Sport SUV and aggressive incentives and fleet sales, Nissan is up 0.24% year to date and Ram is up 0.29%. Lindland also said VW is a company to watch.
Ford, Chrysler and Jeep continue to struggle
Ford needs a boost in the form of new product, according to Lindland.
With a sales drop year to date of 0.33%, the Dearborn automaker is in dire need of its EcoSport, subcompact SUV.
“Unfortunately that product is still six to eight months from launch. Until then, Ford has only the Escape to fight for sales in the hottest part of the market,” Lindland said in the release.
And two Fiat Chrysler brands are facing difficulties.
Chrysler is in danger of dropping below 1% of U.S. market share, according to Cox. The company only has its Pacifica minivan and 300 sedan.
And Jeep is in the midst of a changeover, phasing out the Patriot and old Compass. The new Compass is an important vehicle for company, but it must replace both vehicles and has been shipping to dealers for only a few months.
“In the first five months of 2017, no brand lost more market share than Jeep. With heavy incentives unable to move aging product, Jeep lost more than half-a-percent of share through May of this year,” according to Cox.