MUSCAT: While it’s still too close to call whether 2016 delivered another annual record for US auto sales, it’s clear the era of rapid growth is over. The industry is entering 2017 with analysts projecting the first significant decline in eight years — a drop of 200,000 vehicles, about the equivalent of one factory’s production — to 17.3 million cars and light trucks. While top-earning consumers will continue to snap up luxury vehicles loaded with high-tech features, analysts say higher expenses are working against less well-heeled buyers.
“Car sales have experienced an unprecedented run that just couldn’t last forever,” said Michelle Krebs, senior analyst with Cox Automotive. “Rising gas prices, rising interest rates — that just puts pressure on household budgets.” There’s one wild card for the US auto industry as the year begins: The arrival of Donald Trump as US president on Jan. 20. During the campaign Trump discussed policies that have potential to help auto sales — tax cuts, for example — or hurt them, such as adding tariffs on imported vehicles. When automakers release results on Wednesday, analysts on average project that December sales will come in at a seasonally adjusted annualised rate of 17.6 million cars and light trucks, up from last December’s 17.5 million rate and probably good enough to just squeak past 2015’s full-year total, which also was 17.5 million.
One challenge is that there was one fewer selling day this December compared with the year-earlier month. Another is that December can vex automotive advertisers, caught between November’s Black Friday sales pushes and the clutter of holiday-season ads for other consumer goods. “December is kind of a tricky month,” particularly from Dec. 10 to 26, said Cynthia Brown, Toyota’s national advertising manager for dealerships. This observation led to the heavy use of Toyota’s “Right Light” spot, in which a soldier sees a welcome home greeting outside her airplane window, written with strings of holiday lights. The feel-good ad contains only a subtle reminder of December’s “Toyotathon” sales event.
Other automakers didn’t hold back. Cable channels were jammed with leasing deals, no-interest offers and other aggressive come-ons. General Motors, the largest US automaker, may gain 4.4 per cent, based on the average analyst estimate. Fiat Chrysler, which discontinued its compact and midsize sedans, is projected to drop 14 per cent, while Ford, Toyota, Honda and Nissan are all seen slipping less than 3 per cent. Either way 2016 turns out, what a run it’s been: Since the depths of the recession, light-vehicle sales in the world’s most lucrative market have grown faster than a million units a year on average, delivering an unprecedented streak of annual gains.
