U.S. sales slip in 2017, ending 7-year streak

U.S. new light-vehicle sales slipped 5 percent in December and dipped 1.8 percent to 17.25 million for all of 2017—ending a string of seven annual gains that had propelled the industry to new highs following the 2008-09 market collapse.

After hitting a record 17.55 million in 2016, annual light-vehicle sales fell for the first time since 2009 while topping 17 million units for the third straight year and just the fifth time in history.

Even with the dip in December volume, the seasonally adjusted, annualized pace sales came in at 17.86 million in December, among the year's strongest months.

Car sales slipped 17 percent last month while light truck demand edged up 1.6 percent. For the year, car deliveries slid 11 percent and truck volume rose 4.4 percent.

Among leading auto makers, General Motors, Toyota, FCA, Nissan and Honda posted declines in U.S. deliveries in December while Ford advanced.

Ford's 1.3 percent increase marked its fourth straight monthly gain. GM fell 3.3 percent and FCA US was off as both companies pared back shipments to daily rental companies. Volume dipped 8.3 percent at Toyota Motor Sales U.S.A., 9.5 percent at Nissan North America and 7 percent at American Honda, though Nissan and Honda both set sales records for the year.

Company results

Ford Motor's 1.3 percent gain came on the strength of a 2.4 percent increase at the Ford division, which was fueled by strong light truck volume. Lincoln skidded 17 percent as car sales plunged 26 percent. In December, SUV/crossover demand rose 8 percent but car deliveries slid 5.5 percent, Ford said. For the year, Ford's U.S. deliveries dipped 0.9 percent.

General Motors' sales slipped 3.3 percent behind a decline of 2.9 percent at Chevrolet and 29 percent at Cadillac, even as the company fattened deals. Volume rose 4.7 percent at Buick and 1.2 percent at GMC. GM continues to trim daily rental shipments but said it set new annual sales records for pickup and crossover deliveries, electric vehicle sales and average transaction prices.

At Toyota, volume fell 8.3 percent to 222,985 with sales off 7.2 percent at the Toyota brand and 14 percent at Lexus. Light-truck deliveries, a bright spot for Toyota all year, dropped 5.6 percent last month.

FCA US reported a sales decline of 11 percent as the company dials back on fleet business. Led by a drop in volume of 12 percent at Jeep and 6.9 percent at Ram, every FCA brand except Chrysler and Alfa Romeo posted a decline in deliveries last month.

Honda volume fell 7 percent on weaker car demand, with December sales off 6.3 percent at the Honda Division and 12 percent at Acura. Still, American Honda set an annual sales record of 1,641,429 units in 2017—an increase of 0.2 percent.

At Nissan, volume slipped 9.4 percent at the Nissan brand and 10 percent at Infiniti, yet Nissan still finished with 2017 U.S. sales of 1,593,464, up 1.9 percent for a new annual high.

The Hyundai brand notched its first monthly gain, year over year, with a 1.8 percent increase in December U.S. volume.

Subaru extended its U.S. sales gains to 73 months year over year with a 0.3 percent increase in December deliveries. It was the company's smallest monthly increase of the year but enough to set an annual record of 647,956 cars and light trucks.

December sales dropped 21 percent at Kia, 6.5 percent at Mazda and 19 percent at the Volkswagen brand. Mitsubishi posted a 15 percent increase in December deliveries.

Ford, Nissan and Hyundai also benefited from a spike in rental and fleet business last month.

Among other luxury brands, volume last month rose 10 percent at Mercedes, 4.3 percent at BMW and 16 percent at Audi, but dropped 21 percent at Jaguar, 3.6 percent at Land Rover and 2.5 percent at Porsche.

"Auto makers pull out all the stops to eke out every last sale before the end of the year," said Edmunds analyst Jessica Caldwell. "With sales tapering off, we could be in for a high-stakes incentive war in 2018."

While the tax reform bill signed by President Trump is expected to provide a lift to U.S. sales, analysts say any gains may be negated by rising interest rates.

Spiffs

The average new-vehicle incentive was tracking at $4,302 in the first few weeks of December, J.D. Power says. Year-end deals were projected to lift that figure to a record.

Led by GM, where discounts averaged just over $5,000 last month, industry incentives rose 2.4 percent last month to $3,844, up from $3,756 in December 2016, ALG estimated.

Among the offers, the Volkswagen brand dangled deals with zero due at signing, no down payment, no security deposit and a first-month payment of nothing on many models. Buick offered up to 25 percent off the suggested retail price on remaining 2017 crossovers.

The results come in comparison to a robust December a year earlier, when the fifth-highest seasonally adjusted annual sales rate of all time was recorded.

Analysts had forecast that December would mark the 10th monthly drop of 2017— despite being the strongest month for raw volume.

"In 2017, we had solid GDP growth and good news on employment, wages and consumer sentiment, which helped deliver very strong retail sales for the auto industry," Mustafa Mohatarem, GM's chief economist, said in a statement.

He forecast that light-vehicle sales this year will be in the high 16 million-unit range as income gains stemming from U.S. tax reform are offset by rising interest rates.

Odds and ends

• Among auto makers, GM, Ford, Honda, Nissan, Jaguar Land Rover, Mercedes, Toyota, Subaru, Volvo and VW Group gained U.S. market share in 2017, while only four companies—BMW, FCA, Mazda, and Hyundai-Kia -- lost ground.
• The Toyota Camry remained the top-selling car in the U.S. in 2017, with sales of 387,081, well ahead of the Honda Civic at No. 2, with volume of 377,286. The Civic was ahead by 2,130 at the end of November.
• There were 26 selling days last month vs. 27 in December 2016.
• Among major auto makers, Fiat Chrysler and Hyundai-Kia failed to post a single monthly sales gain, year over year, in 2017. Among brands, Fiat, Jeep and Smart fell short of a monthly advance, year over year, in 2017.
• Incentives, expressed as a percentage of MSRP, stood at 11.2 percent in early December, exceeding the 10 percent threshold for the 17th time over the last 18 months, J.D. Power says.
• Average transaction prices closed the year on a strong note, rising nearly 2 percent in December 2017 to $36,113, a record high, mostly behind strong light-truck demand, Kelley Blue Book says.
• Average new-vehicle transaction prices for all of 2017 finished 2 percent higher than last year, slightly slower growth than 2015 and 2016, at 2.5 percent, Kelley Blue Book says.