U.S. Auto Sales Sputter... Again

By: Kristi Kenyon July 19, 2017
U.S. auto sales dropped this spring, but revenues remained strong on the sales of pickup trucks.
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Although unemployment is down and consumer confidence is up, the auto industry hasn’t seen the same upturn. U.S. car sales have been down for 6 straight months in 2017. Yet, many experts don’t feel there’s any reason to panic.

In June, U.S. auto sales fell 3%, putting overall sales down 2.1% for the first half of the year compared to 2016. Nissan, Honda, and Toyota were able to show small economical gains, but General Motors, Ford, and Fiat Chrysler saw declines.

"We think the second half could be a little bit stronger than the first half was," Autotrader Senior Analyst Michelle Krebs said, adding that she didn’t see any shortcomings suggesting any sort of collapse.

Additionally, buyers who put off new car purchases during the Great Recession and instead have bought over the last few years aren’t buoying the industry with new car purchases, noted Jessica Caldwell, executive director of analysis for Edmunds.com.

Most of the plunge is found in sales of small cars and sedans, which fell 13% in June from last year. With gas prices staying at an average of $2.24 per gallon, more consumers are purchasing larger vehicles. From baby boomers to millennials, there have been more sales for crossovers due to their high-riding design and roomier space for growing families. In fact, trucks and SUVs accounted for 63% of June sales. Although Ford had a 1% drop in the first half of the year, the company’s revenues will increase on strong pickup sales, according to Mark LeNeve, Ford’s vice president of sales.

The question at this point will be whether automakers will have to dramatically reduce their production of cars, and shift those resources to make more SUVs and crossovers. The consumer demand for light trucks has altered automakers’ focus.

“[It’s] an ongoing dynamic that will continue through the remainder of 2017 into 2018,” predicted Toyota Sales Chief Bill Fay.

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