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US light-vehicle sales return seventh consecutive annual sales gain in 2016, with 0.3% increase to 17.54 mil. units

04 January 2017 IHS Markit Automotive Expert

On a volume level, US light-vehicle sales rose 3.0% year on year in December, bringing the full-year results just ahead of 2015 sales. The seasonally adjusted annual rate came in at 18.38 million units for the month.

IHS Markit perspective

  • Significance: December provided a strong close for US light-vehicle (LV) sales for another record year, with a strong seasonally adjusted annual sales rate (SAAR) of 18.38 million units. Ford boasts that the F-Series has been the best-selling truck in the United States for 40 consecutive years, while Toyota's Camry closed the year out as the best-selling passenger car in the US for the 15th consecutive year.
  • Implications: This is the first time in history that US sales have seen gains for seven consecutive years, with growth supported by increased demand for crossover utility vehicles (CUVs) and increased product ranges, as well as strong consumer confidence, low interest rates, and available credit.
  • Outlook: December's SAAR came in at 18.38 million units, well above the 17.5 million SAAR that IHS Automotive projected would be needed for US 2016 LV sales to set another record. The year closed out with sales up just enough to claim another record. Initial data for 2016 calendar year shows LV sales up 0.3%, to 17.54 million units. For 2017, IHS Automotive is forecasting a small contraction to 17.37 million units, still a very healthy year. Although we believe that the upside risks for automotive demand in the US are more apparent than the downside risks, there are some issues that will need monitoring as we move into 2017.

Detroit automakers

General Motors' (GM) target was to reduce rental car sales in 2016 by between 80,000 and 90,000 units and for a fleet mix target of about 20%; through the close of 2016, the company dropped rental fleet sales by about 76,000. This affected sales over most of the year. In December, fleet sales were 21.7%. In full-year sales 2016, GM reduced fleet volume to 19.6% of its total sales. GM is also looking to operate with about 70 days' supply, but that figure has been crawling up. At the end of July, GM had 66 days' supply. At the close of December, GM had 87 days' supply (844,942 units in inventory at the end of the month), the same as a month prior in part on production adjustments. GM sales jumped 10.0% year on year (y/y) in December, a gain ahead of the industry that helped ease the comparison to 2015. The company closed out down 1.3% in full-year 2016 compared with full-year 2015. Buick sales gained 2.9% over the course of 2016, with declines in the Enclave, LaCrosse, and Verano offset by the addition of the Envision and gains for Encore and Regal. A new product is driving a stronger year end for Buick - some of the LaCrosse decline is on model changeover - while the decision to drop the Verano after a short 2017 model-year run will affect Buick into 2017. With a mixed performance throughout 2016, Cadillac closed the year down by 3.0% compared with the year before. The XT5 and new volume from the CT6 were positive contributors, although neither was available for the full year. Cadillac's ATS and CTS continue to provide a drag. Chevrolet's volume was up 12.8% in December, although the bow-tie brand's full-year results were down 1.4%; the largest and most mainstream of GM brands was more notably affected by the fleet reduction. It was similar for GMC sales; a 5.8% December gain helped, but the full-year results were down 2.2% compared with 2015. Although GMC shows a decline, GM said it expected a record calendar year average transaction price of USD43,088 and Denali-trim vehicles accounted for nearly 30% of sales.

Ford has demonstrated a volatile 2016, but managed a small 0.1% improvement for the full year. Ford brand sales, however, dropped 0.4%. Lincoln had a good year and grew sales by 10.4%. Ford can continue to claim top-selling brand status, and the F-150 held its sales crown, with 40 consecutive years as the best-selling truck in the United States. Ford Motor Company car sales dropped by 13.0% over the course of 2016, while its utility vehicle sales grew by 4.9% and truck sales by 6.5%. Ford brand car sales were off by 14.0%; declining sales in passenger car segments were a contributor to the company recently announcing the decision to cancel a planned new plant. Lincoln's all new Continental had sales of 5,261 units in the last two months of 2016 - compared with only 4,951 MKS sedans sold in all of 2016 - and contributing to Lincoln car sales growing by 7.9% in 2016. Lincoln utility sales are also still strong, up 11.9%.

Fiat Chrysler Automobiles (FCA) lost its ability to claim consecutive y/y gains after a change in reporting methodology in July, and closed out 2016 down slightly by 0.4% compared with 2015. December continued to have planned reduction sales to rental fleets (which also coincides with the elimination of the Chrysler 200, Dodge Dart, and Jeep Compass as well), and reported a 26% decline in fleet sales in December. Under the new measures, in 2016 only Ram brand (up 11.1%) and Jeep brand (up 6.1%) showed full-year gains - although the Jeep brand also reflected declines throughout the third quarter of 2016. There was a 3.9% full-year drop for Dodge, a 27.0% decline for Chrysler, and a 23.7% decline for Fiat. In 2016, FCA sold 545,851 trucks and light commercial vehicles (LCVs), 1.13 million utility vehicles, 585,143 cars and multipurpose vehicles (MPVs). Sales of utility vehicles were up 5.3%, trucks and LCVs gained 11.1%, and cars and MPVs declined 17.0%. FCA will rely on trucks and SUVs for most of its North American sales; the wind down of Chrysler 200 and Dodge Dart are impacting results. Fiat brand's 500X utility claimed a 3.1% gain for full-year results, despite a decline of 76.4% in December sales. The 500 and 500L are down 35.6% and 58.9%, respectively, over the course of the year. At Dodge brand, full-year results include declines in all nameplates other than Caravan and Durango. Sales of the all-new Pacifica reached 62,366 units since its launch in mid-2016.

Japanese automakers

Toyota has also had a volatile 2016, and ended the year with a 2.0% overall sales decline compared with 2015. Toyota Division car sales overall dropped 9.0% in 2016. Toyota cars showing improvement included the Corolla range (sedan and iM) and Yaris. While Camry held the crown of best-selling passenger car, the model's sales declined 9.5% y/y. Both Camry and Corolla managed to hold off the RAV4, with full-year sales of 388,618 units for Camry and 378,210 units for the Corolla, compared with sales of 352,154 units of the RAV4. Toyota Division trucks were up 6.1% for the year, with sport utility vehicle (SUV) sales up 10.6% and pickup sales up 2.9% on better inventory of the Tacoma. At Lexus, car sales dropped 20.5% and truck sales gained 12.5%.

American Honda had full-year 2016 sales up 3.2%. Honda Division sales grew 4.8% at 1.47 million units, while Acura sales dropped 8.9% to 161,360 units. For the full year, Honda's car lines managed to outperform SUVs (771,195 cars versus 705,387 trucks) on volume. The truck side is helped by the all-new Ridgeline. However, for the full year, the CR-V (357,335 units) was not able to outsell the Civic (366,927 units), although the gap is closing. Both of these vehicles, however, outsold the Accord (345,225 units). Acura, which continues to have more than 70% of its sales from the MDX and RDX, had full-year SUV sales slip by 1.3% and car sales fall by 21.2%.

Nissan Group closed out 2016 with sales up 5.4% compared with 2015. Nissan Division sales were up 5.5% and Infiniti up 3.6% over the course of the year. Nissan Division car sales fell 2.4%, while trucks were up 16.2%. Infiniti's car sales dropped 16.9%, despite an updated Q50 and new Q60 coupé, while SUV sales were up 23.0%.

Subaru delivered a 61st consecutive month of y/y growth, with a 11.4% gain, and also reported record full-year sales of 615,132 units. Consistent with consumer trends, the BRZ and Impreza had sales decline, although the company benefits in early 2017 with an all-new Impreza. A combination of struggling sales at Volkswagen (VW) and gains at Subaru has enabled Subaru to outsell the VW Group in full-year figures. Mazda sales dropped in 2016, falling 6.4% as its cars struggled. All but the Miata of the company's car lines is experiencing declines, while SUVS are gaining overall.

Other automakers

VW Group had sales grow y/y in December, up 16.0%. VW brand finally showed gains as the Passat and Tiguan picked up the pace; for the year, VW Group is still down by 2.6%. Audi reported its 72nd straight month of sales growth, up 13.7% and 4.0% for the year, while Porsche gained 4.9% for the year. Combined sales for Hyundai and Genesis (775,005 units, up 1.7%), and affiliate Kia (647,598 units, up 3.5% in 2016) reflected a 2.5% gain over the year.

Outlook and implications

December's SAAR came in at 18.38 million units, well above the 17.5 million SAAR that IHS Automotive projected would be needed for US 2016 LV sales to set another record. The year closed out with sales up just enough to claim another record. Initial data for 2016 calendar year show LV sales were up 0.3%, to 17.53 million units. For 2017, we are forecasting a small contraction to 17.37 million units, still a very healthy year. While we believe the upside risks for automotive demand in the US are more apparent than the downside risks, there are some issues that will need monitoring as we move into 2017.

These issues include the flow of off-lease vehicles adding supply to the used vehicle market and putting downwards pressure on prices, any effects from the rise in interest rates, rising levels of fleet sales compared with retail sales, moderate overall economic growth, and manufacturer incentive activity, according to the IHS Automotive sales forecast team. Signals that any of them are becoming overheated could present questions about the sustainability of the current demand levels. Looking into 2017, although the rise in incentives and fleet sales needs to be monitored, both should help provide support to demand levels through calendar-year 2017. A flushing out of the new administration's policies regarding trade and environmental regulations could, however, create some uncertainty for the automotive industry.

There were 27 selling days in December, one more than the year-earlier period, although December also included one more weekend. On a unit-volume level, 1.68 million LVs were sold, growth of 3.0% compared to year-earlier levels.

Given the additional selling day versus December 2015, y/y volume growth for the month was up 3.0%, paced by a 10.0% improvement at GM; year to date (YTD), however, GM tracked a loss. For the full year, Toyota had a larger loss than GM, down 2.0% and VW had a contraction of 2.6%. FCA was nearly flat, but also in the loss column with a 0.4% drop. Subaru had the strongest growth of 5.6%, followed by Nissan's 5.4%.

About this article

The above article is from IHS Automotive Same-Day Analysis of automotive news, events and trends, and is a deliverable of the World Markets Automotive Service. The service averages thirty stories per day and also provides competitor and country intelligence. Get a free trial.

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