TM Toyota Motor Corporation

By Adrienne Roberts and Mike Colias 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (February 2, 2018).

Auto makers on Thursday reported underwhelming U.S. sales in January, signaling the car industry is getting off to a relatively muted start to 2018 despite a confluence of positive economic factors that tend to help vehicle sales.

Overall U.S. vehicle sales rose 1% in January, to 1.2 million, according to Autodata Corp. The tally was padded by an extra selling day compared to January 2017. The seasonally adjusted pace of sales slipped to 17.1 million on an annualized basis, from 17.4 million a year earlier.

Analysts expect sales to cool in the initial months of 2018 following the strong pace set in the final months of last year. Still, sales of profit-rich trucks and sport-utility vehicles remain historically robust -- a welcome trend for domestic auto makers that generally pursue high-margin sales over market share.

General Motors Co. sold 198,548 vehicles in January, a 1.3% increase from the same period in 2017. Ford Motor Co. reported a 6.3% decrease, selling 160,411 vehicles during the month. Each reported higher selling prices and growth in truck sales, factors that bode well for the bottom line.

Fiat Chrysler Automobiles NV continued to report sales declines, the result of pulling back on deliveries to rental-car companies. It said sales were down 13% in January, falling to 132,803, after cutting rental sales in half during the month.

Toyota Motor Corp. reported a 16.8% increase to 167,056 vehicles, driven by sales of the Japanese auto maker's popular RAV4 crossover and the redesigned Camry sedan. The company's numbers compare with a weak January 2017 and included an increase in sales to rental-car customers.

Honda Motor Co.'s sales slipped 1.7%, to 104,542 vehicles, as the auto maker struggled to produce enough crossover SUVs. Nissan Motor Co. posted a 10% increase in sales to 123,538 units, a January record for the Japanese auto maker. The gain reflected a double-digit increase in sales of Nissan's SUVs and trucks and a jump in rental sales.

Most car companies are trimming production in the first quarter, according to WardsAuto.com, in anticipation of a softer marketplace, a move that curbs inventories without having to resort to ever-richer sales incentives.

AutoNation Inc., the nation's biggest dealership chain, on Thursday forecast 16.8 million sales for the U.S. market in 2018, a decline of about 2.3% from the prior year. The retailer said more consumers will shift to buying "nearly new" cars or trucks due to the increasing number of vehicles coming back to dealerships following short-term leases.

Demand for new automobiles will be closely watched in the wake of recent tax cuts and a surge in consumer spending. Car sales have fared well since the financial crisis, increasing for seven consecutive years before hitting a speed bump in 2017.

Forecasters expect another small decline this year. Much of the pent-up demand for vehicles has been absorbed, while higher interest rates could sway some would-be buyers into settling for a used vehicle instead of buying new, analysts predict.

Still, strong economic underpinnings that typically bolster car sales, such as low unemployment and wage growth, should keep sales at historically high levels, analysts forecast.

Ford has seen more orders from small businesses and larger companies, a sign that tax reforms may be encouraging commercial customers to invest in upgrading or expanding their fleets, U.S. sales chief Mark LaNeve said. Ford and GM each reported increases in sales in January to contractors, delivery firms and other commercial fleet buyers.

The industry's recent sales momentum, including booming demand for profitable pickup trucks and SUVs, led to big investments by several auto makers in North American factories and white-collar operations. Ford is paying out $7,500 in profit-sharing to more than 50,000 plant workers; Fiat Chrysler is also paying out sizable profit-sharing checks, and an additional bonus due to a cut in the corporate tax rate.

"January is typically a ho-hum month for auto sales following the major holiday blowout sales we see at the end of the calendar year," said Jessica Caldwell, executive director of industry analysis at Edmunds.com. "Shoppers at this time of year are driven by necessity."

Write to Adrienne Roberts at Adrienne.Roberts@wsj.com and Mike Colias at Mike.Colias@wsj.com

(END) Dow Jones Newswires

February 02, 2018 02:47 ET (07:47 GMT)

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