U.S. Auto Sales Cool in January
February 01 2017 - 10:00AM
Dow Jones News
By Mike Colias and Anne Steele
General Motors Co. and Ford Motor Co. posted declines in January
auto sales amid what is expected to be a broader cooling in demand
following brisk sales in the prior month that is creating a glut on
dealer lots.
GM, the No. 1 U.S. auto maker, sold 195,909 vehicles in the
month, compared with 203,745 a year ago, for a sales decline of
3.8%. Retail sales declined 4.9%.
Ford's sales, meanwhile, edged 0.7% lower to 171,186. The
Detroit auto maker reported its retail sales climbed 6% while fleet
sales declined 13%. Ford said its popular F-series pick up trucks
-- up 13% -- saw their best sales start for the year since
2004.
GM said its Jan. 31 inventory was equivalent to more than 100
days' of supply, reflecting a broader spike in dealer stock for the
industry. High inventories have traditionally led to discounting
and layoffs.
GM's inventory, for instance, could come down in coming months
as the auto maker lays off thousands at car plants in the U.S.
Demand for sedans and compact cars has slumped amid low gas prices,
which typically boost buyers' appetite for trucks and SUVs.
GM sold 195,909 vehicles in the month, compared with 203,745 a
year ago. Retail sales declined 4.9%.
While January typically is a slower month for auto demand,
leading to the buildup of supply for warmer months, RBC Capital
Markets estimates the industry now has 90 days' worth of supply, up
from 62 days' in December and 77 days' in January 2015.
The firm says the industry is about 12% higher than what is
typical for the initial month of the year.
Analysts called for a broad range of results in January.
Edmunds.com estimating a relatively flat performance for the
industry compared with the same period, while WardsAuto.com
forecast a 4.4% decline and a much lower seasonally-adjusted annual
rate of sales than what was recorded in December or the prior
January.
December, fueled by record incentive-spending by auto makers,
was among the best months for U.S. light-vehicle sales in history,
helping the industry set a second-consecutive annual sales record.
Auto makers are planning to build slightly more vehicles in North
America in the first quarter than the same period a year ago,
signaling optimism that 2017 full-year sales will remain in the
17.5-million range that was reached in each of the past two
years.
Low gasoline prices, cheap financing and generous discounts are
expected to continue propping up demand in the auto industry. JD
Power recently estimated auto makers spent an average of $3,614 on
average per-vehicle incentives in January, substantially less than
December but 7% higher than January 2015.
Edmunds analyst Jessica Caldwell points out it is tricky to use
January -- the lowest volume month -- as a bellwether for how auto
sales will trend for the year.
"But 2017 is already proving to be a year unlike any other --
expectations were that sales were going to level off or decline,
but the president has proven a bit of an X-factor," she said.
"Considering the way the stock market has performed and current
consumer sentiment, it seems policy will play a bigger role in the
market than ever before."
Write to Mike Colias at Mike.Colias@wsj.com and Anne Steele at
Anne.Steele@wsj.com
(END) Dow Jones Newswires
February 01, 2017 09:45 ET (14:45 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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