Report: 2017 Auto Industry Outlook Positive, Despite Slow Start

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Jan. 30, 2017—A forecast developed by J.D. Power and LMC Automotive notes that new vehicle sales will slow down for January, but the overall outlook for the year remains positive. 

U.S. new-vehicle retail sales in January are expected to reach 874,400 units, a 2 percent decline compared to last year, while total light-vehicle sales are expected to reach 1,125,900 units, a 1.8 percent decline, according to the report.

"With sales posting impressive gains at the end of December, the slow start to January was not unexpected," said Deirdre Borrego, senior vice president of automotive data and analytics at J.D. Power. "The industry has started off with a retail sales decline since 2010, and the challenges for the industry remain maintaining profitability while coping with high inventory levels and elevated incentives, which continue to rise year over year."

Through the first 10 days of January, incentive spending per unit was $3,614, down $387 from December ($4,001) but up $232 from January 2016 ($3,382).

The average new-vehicle retail transaction price to date in January is $31,473, a record for the month, and surpassing the previous high of $30,826 set in January 2016.

With record transaction prices for the month offsetting slightly lower absolute retail sales volumes, consumers are on pace to spend $27.5 billion on new vehicles in January, on par with last year's level. Trucks account for 63.3 percent of new-vehicle retail sales so far in January—the highest level ever for the month of January. 

"We expect 2017 to be another record year in U.S. auto sales,” said Jeff Schuster, senior vice president of forecasting at LMC Automotive. “While there are many variables to consider, one area of caution is the large number of lease maturities repopulating the used-car market. It creates demand for a vehicle, but also more used-vehicle options to compete with the new-vehicle market."

LMC is forecasting total light-vehicle sales in 2017 to be at 17.6 million units, an increase of just 0.1 percent from 2016. 


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