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Pickups, SUVs and crossovers dominated strong auto sales in 2017

Russ Mitchell, Los Angeles Times on

Published in Business News

Robot vehicles might rip apart the business model of the car industry in the coming years, but for now, automakers are still selling lots of cars and light trucks.

U.S. sales for 2017 are expected to come in at 17.2 million vehicles, to be adjusted slightly up or down this week as more companies report their numbers.

That's down from 17.55 million in 2016, a record high. But it's still considered healthy, especially considering how many people bought cars and trucks over the past few years.

It appears the cyclic downturn could be gentle, given the strength of the U.S. and global economy.

"A lot of the strong economic news has translated into consumers going out there and buying new vehicles," said Charlie Chesbrough of market research firm Cox Automotive. "We're looking at the stock market at record highs, unemployment rates essentially near full employment and interest rates at a still-affordable level."

December sales results were stronger than expected, largely driven by a U.S. economic growth rate near 3 percent, compared with about 1.2 percent as the year began, he said.

 

The cyclical softening of demand is likely to push sales down to 16.7 million vehicles or so this year, analysts say. The new tax bill will withhold less money from most people's paychecks. That could goose the number a bit, but rising interest rates could cancel that out by boosting monthly car-loan payments, said Alec Gutierrez of Kelley Blue Book. "For a lot of consumers, an extra $20 a month is a big deal."

But for many others, price sensitivity isn't a big issue. The average cost of a motor vehicle hit a record high in 2017, at $36,113, largely driven by the continuing growth in pickup sales.

While sales at General Motors, Toyota, Fiat Chrysler and Honda all fell a few percentage points in December, Ford was up 1.3 percent on the strength of its trucks, especially the enormously popular F-Series pickup. The F-Series repeats as the best-selling vehicle in the U.S., according to Motor Intelligence.

"If a company is strong in pickup trucks and sport utility vehicles, they had a great year," said Michelle Krebs, senior analyst at Autotrader. "If they were heavier on cars and sport utilities, then less so."

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