US Auto Sales Continues Growing in 2018

US Auto Sales Continues Growing in 2018

05/04/2019 Jon Chang Category: News

Surprisingly, even with the ongoing drop in car demand along with increasing delivery of light trucks, last December showed a 2.2 percent increase in auto sales. In fact, December ended up becoming the second-best month of the whole year in terms of volume, with total sales of 1.64 million cars. Once all was said and done, 2018 as a whole saw delivery of 17.33 million cars and light trucks, the fourth largest year in the history of automobile sales.

Sales last year even beat strong sales from the year before, a strong year itself, with a SAAR of 17.72 million versus 17.44, respectively. Jonathan Smoke, chief economist of Cox automotive, confirmed that "new vehicle sales were surprisingly strong in 2018 despite late cycle headwinds from higher interest rates and more nearly-new competition in the used market." He concluded that "the key positive factor was stimulated demand from tax reform, which strengthened retail demand as the year progressed and also enabled strong gains in fleet sales."

This makes sense, since the steady economic growth and discounts that we saw last year often fuel growth in new vehicle sales. These factors were so strong, consumers didn't even really seem to be bothered by lowering stock prices, seeing as how sales rose 0.4 percent through November. As a whole, last December's 6.9 percent increase (7.7 for the year) in light-truck sales was enough for these numbers, despite the drop of 8.2 percent for the month and 13 percent for the year of car deliveries, this being the fifth year in a row of lower volume in car sales. In the US, there were sales increases with Honda, FCA US and Nissan while Ford, Toyota and General Motors all saw declines. In fact, FCA US saw total sales up 14 percent, with the greatest increase of 37 percent at Ram in December.

On the other end the spectrum, Ford Motor Co. saw the biggest drop compared to the rest of the large automakers at 8.8 percent. The dip wasn't across the board, however, as the actual Ford division saw a drop of 9.6 percent while its Lincoln division saw a sharp increase of 8.5 percent for the month. 2017 as a whole was somewhat better, posting only 3.5 percent decline in sales, though that was part of a decrease in delivery of 18 percent.

In the world of smaller auto makers, the standouts were Mazda with a 3.8 percent decline (with 3.8 increase for the year as a whole) and Mitsubishi, with a 5.7 percent rise and a 14 percent increase for the year.

December proved to be much kinder to some luxury brands. Deliveries for Jaguar were up by 1.4 percent and 4.4 percent for Porsche, which ended a record-setting year for the company at 57,202 units sold in the US. There were also extremes in this market, with Land Rover posting a 33 percent rise while there was an 8.8 percent drop in Volvo sales and a whopping 69 percent drop in Genesis sales.

As positive as things looked in December, 2019 is projected to bring with it a slowdown in auto sales being as low as 16.7 million units. If that ends up being the case, this would be the first time these numbers have dropped below 17 million in five years.

"Auto makers will continue shifting showrooms from cars to utilities," Stephanie Brinley, principal automotive analyst with IHS Markit, said in a statement. "While the decline in passenger car sales in 2019 is not expected to be quite as sharp as in 2018, conditions suggest the bottom for passenger-car share has not yet been found."

There are other factors to consider as well. For example, there is a larger inventory of used cars and rising interest rates, which will naturally lower demand for new cars.

Not everyone is convinced in these numbers and see things differently. Emily Kolinski Morris, chief economist at Ford, one of the hardest hit manufactures last year, concluded that "the data we have in hand suggests an economy that remains on solid footing heading into the new year."

We're just coming out of the first quarter of the year, so it's hard to saw who will be right and who will be wrong. But either way, it doesn't look like the auto industry will be setting any records this year.

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