DETROIT — Several sales titles and records are on the line for the U.S. automotive industry heading into the final two months of the year.
Among the most prominent are the Japanese automakers battling for the titles of America's best-selling cars and crossovers, while the overall industry could record a third straight 17 million-unit year for the first time ever.
The races, combined with slightly declining sales, as reflected in October's 1.1 percent drop, are expected to test the industry's discipline regarding incentive spending, fleet mix, and balancing profits vs. market share heading into 2018.
"We have plateaued; we'll see some contraction," said Stephanie Brinley, senior automotive analyst for IHS Markit. "That makes for a difficult environment because automakers generally want to improve sales … and if you're in a down market, it makes it harder, and then you start fighting for market share."
Those conditions are traditionally when things get "dangerous," she added, "because market share can be bought."
The overall industry this year has shown some restraint on incentives, but spending has steadily increased amid leveling average transaction prices. AutoData Corp. estimates incentive spending for the year is up 11 percent through October to an average of $3,624 per vehicle, including a 5.4 percent increase last month to $100 above the yearly average.
ALG estimates the average transaction price for a new light vehicle was $33,226 in October, up 0.9 percent from a year earlier. Incentive spending as a percentage of ATP also increased to 11.5 percent in October, up 0.8 percentage point from a year ago.
In addition to rising incentives and plateauing average transaction prices, Edmunds.com reports automakers are struggling to move lagging 2017 inventory off dealer lots. Edmunds reports 72 percent of new vehicles sold last month were 2017 models, up from 60 percent the previous year.
"Clearing out old inventory is expensive, especially when automakers are forced to deeply discount passenger cars, which already have thin profit margins," said Jessica Caldwell, executive director of industry analysis for Edmunds. "With two months left in the year and this much inventory remaining, we expect to see some very creative year-end sales events to entice car shoppers."