U.S. auto sales decelerate in January, likely to remain firm on strong demand throughout 2017

Auto sales in the U.S. slowed in January 2017; however, they remain pretty firm. Auto sales reached 17.5 million units, as compared with the 18.3 million unit pace seen in December 2016 and the 17.8 million unit pace recorded a year ago.

The results came in mixed. Nissan and Honda led the year-on-year growth, rising 6 percent each, whereas Hyundai recorded sales of 3 percent rise.  In the meantime, Toyota and FCA each registered a decline of 11 percent year-on-year. Ford recorded modest decline of 1 percent, while GM and Kia registered decline of 4 percent and 7 percent year-on-year respectively.

There continued to be a high demand for light trucks, which rose 6 percent. Meanwhile, passenger cars continued to decline in the month, falling 13 percent year-on-year.

In spite of the slowdown in sales when compared to December and year-ago levels, auto sales continue to be on quite a strong footing, noted TD Economics in a research report. But there are certain signs that auto sales might not be as solid as they seem: levels of inventory are elevated, fleet sales have been rising and incentives have been on the rise. As such, automakers would have to exercise some discipline with respect to incentives and production in the quarters ahead to keep the industry healthy, stated TD Economics.

“That said, strong employment and wage gains, combined with favorable financing conditions, should bode well for demand throughout 2017, helping to keep auto sales chugging along close to current levels”, added TD Economics.