November's sales gain sets up 17 million in '17

A solid November showing has practically guaranteed that U.S. new light-vehicle sales will top 17 million units in 2017 for the third straight year and only the fifth time ever.

But when the final numbers are tallied in early January, expect applause, not exuberance. Most forecasts see this year's total slipping from 2016's record 17.5 million. And 2018 sales are predicted to ease again.

November's industrywide sales rose 1.4 percent to 1,399,640 deliveries, led once again by strong sales of light trucks. Widespread, though not sharply higher, incentives also helped.

That total brings sales for the first 11 months to 15.64 million, down 1.4 percent from a year earlier. That leaves the industry about 1.36 million units away from 17 million. Last year, December sales were 1,688,368. So sales this month would have to tumble about 19 percent for 2017's total to fall shy of 17 million -- a bigger drop than in any month this year.

At the same time, automakers would have to sell about 1.9 million vehicles in December -- 13 percent more than last year's record for the month -- to give the industry its eighth consecutive year of growth. In other words, that's not happening either.

Christopher Hopson, manager of North America light vehicle forecasting at IHS Markit, said total volume for the year was trending toward "a 17.2 million unit volume level."

But 17 million in 2018? Maybe not.

Cox Automotive last week said it was forecasting U.S. sales of 16.6 million light vehicles in 2018. And the National Automobile Dealers Association now forecasts U.S. sales of 16.7 million new cars and light trucks next year.

"We expect 2018 to be a robust year," NADA Chairman Mark Scarpelli said in a statement. "Every dealer in America, myself included, would be thrilled with a seasonally adjusted annualized rate of above 16 million. Because it means that, one, the market is stable, and two, that demand is still healthy."

GM Chief Economist Mustafa Mohatarem agreed. "U.S. economic growth has stepped up and we expect the momentum will carry over to 2018," he said. "Employment continues to grow at a solid pace, wage growth will accelerate and consumer confidence just hit a 17-year high, so industry sales should remain strong."

Sales are being driven by strong demand for light trucks -- notably crossovers -- and lingering replacement demand following hurricanes in Texas and Florida. In addition, low interest rates and gasoline prices, steady job gains and lofty U.S. equity markets are helping support industry sales, automakers and analysts say.

It "doesn't hurt that automakers are starting to really sweeten the deals to clear out lingering 2017s and end this year on a high note," said Jessica Caldwell, Edmunds' director of industry analysis.

ALG estimated the average transaction price for a new light vehicle was $33,660 in November, up 1.9 percent from a year ago. Average incentive spending per vehicle grew 4.6 percent, or $162, to $3,692.

ALG also estimated the ratio of incentive spending to average transaction price to be 11 percent, up from 10.7 percent a year ago. That closely watched ratio topped 13 percent at Kia, Nissan, Hyundai and FCA.

While incentives propped up overall volume, the impact of fleet sales was mixed. Fleet sales fell 25 percent at Fiat Chrysler and 13 percent at General Motors. But at Ford Motor Co., fleets accounted for 26 percent of total sales, up from 22 percent a year earlier. And Toyota Motor Sales was uncharacteristically silent on its fleet volume.

Ford's 7 percent increase in light vehicles -- aided by higher fleet, car and light-truck volume -- marked a third straight month of at least 6 percent gains.

GM sales slipped 2.9 percent on lower fleet shipments and flat retail demand, with all four brands posting a decline.

GM's crossover sales were hampered by an 8.9 percent decline for the compact Chevrolet Equinox due to limited supply after a monthlong union strike at the Canadian plant that builds it. Equinox sales fell below 20,000 for only the second time in the past 12 months.

FCA, down 4 percent, continues to look for its first sales increase of the year.

Toyota Motor, ending a streak of five straight monthly year-over-year gains, said sales dropped 3 percent in November on a decline of 2.4 percent at the Toyota division and 6.7 percent at Lexus.

David Phillips contributed to this report.