February Auto Sales Down 3 Percent Over 2016

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Car Sales Down

Feb. 27, 2017—New vehicle sales are expected to decrease 3 percent year over year to a total of 1.3 million units in February 2017, according to Kelley Blue Book.

After a record year of sales in 2016 and seven consecutive year-over-year sales increases, the 2017 forecast calls for sales in the range of 16.8 million to 17.3 million units, which represents a 1-4 percent decrease from last year. The decrease would result in an estimated 17.1 million seasonally adjusted annual rate (SAAR). 

"Retail growth for manufacturers will be tough to achieve in February, as consumer demand remains relatively flat despite increased incentives," said Tim Fleming, analyst for Kelley Blue Book. "Regardless of the expected dip in overall volume, at a SAAR of more than 17 million, the sales pace for the industry is healthy, and more importantly, looks to be sustainable as we head into the high volume selling months ahead."

In February, new light-vehicle sales, including fleet, are expected to hit 1.3 million units, down 3 percent compared to February 2016 and up 14 percent from January 2017. The seasonally adjusted annual rate (SAAR) for February 2017 is estimated to be 17.1 million, down from 17.6 million in February 2016 and down from 17.5 million in January 2017.

Retail sales are expected to account for 73.9 percent of volume in February 2017, down from 75.6 percent in February 2016.

"Subaru of America sales will be lifted by its crossover utility vehicles like the Outback and Forester, as it heads toward another record month," said Fleming. "In addition, the all-new Impreza, which is now on sale, will provide a short-term boost to the automaker, but longer-term prospects for the small car segment remain bleak. Subaru has aggressive growth targets for 2017, but they currently stand in a great position as the brand with the lowest incentive spending and fastest-selling inventory in the industry."

Fiat Chrysler could see one of the biggest sales declines for the month, with volume dropping most on its car models. Car volume is down largely due to the wind down of the Chrysler 200 and Dodge Dart. Also, after many years of steep growth, the Jeep brand is running into headwinds, although the Renegade small SUV is drawing positive attention. Jeep also will soon benefit from the upcoming second generation Compass, which will replace the aging Compass and Patriot. 

Utility segments should top the industry again, with projected growth for the compact and mid-size SUV segments in the 2-5 percent range. The market for SUVs is as strong as ever, and light trucks as a whole are expected to make up 63 percent of sales in February 2017, up from 59 percent just one year ago.

Compact and mid-size cars, on the other hand, are expected to fall by double digits. Kelley Blue Book's overall outlook for compact cars, while not positive, is slightly better than mid-size cars, as they face less competition from SUV segments, which tend to have much higher transaction prices.

 

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