U.S. new-vehicle sales this month, fueled by higher incentives, are expected to roughly match the levels of January 2017, but the selling rate is projected to decline as the industry prepares for a second straight year of lower volume.
Forecasts from Cox Automotive and LMC/J.D. Power call for sales to rise about 1 percent year over year, while Edmunds projects a 1.4 percent decline.
All three forecasts call for sales of around 1.1 million vehicles. Cox and LMC/J.D. Power say that will result in a seasonally adjusted annual rate of sales of 17.1 million vehicles, while Edmunds forecasts a 16.7 million SAAR. Both figures are below the January 2017 rate of 17.43 million.
"Coming off a strong sales period to close out 2017, a slower start to the year was anticipated," Thomas King, senior vice president of the data and analytics division at J.D. Power, said in a statement. "After the industry's emphasis on the sell-down of old model-year vehicles in December, January is a transition month as manufacturers shift focus towards 2018 model-year vehicles."
January is typically the lowest-volume month of the year. This month, lower-than-normal temperatures in much of the country kept buyers indoors.
“The bomb cyclone that tore through the East Coast at the beginning of the month certainly didn’t help an already slower sales month,” Jessica Caldwell, Edmunds’ executive director of industry analysis, said in a statement.
Although volumes are about the same as a year ago, analysts say customers are buying more expensive vehicles, driven by continued demand for higher-priced pickups and SUVs. Automakers are scheduled to report January sales on Thursday.
LMC and J.D. Power said consumers were on pace to spend $28.8 billion on new vehicles in January, just more than $1 billion above last year's level. They said the average new-vehicle retail transaction price in the first 16 selling days of the month was a record $32,169, topping the previous high for the month of $31,422 set a year ago.
Discounts are rising accordingly.
Through the first two weeks of the year, J.D. Power says the average incentive spending per vehicle was $3,733, up $94 from the same period last year and on track to set a record high to start the year. Incentives as a percentage of sticker price were at 10 percent, marking the 18th time in the last 19 months they have hit or exceeded 10 percent.
"The challenge in 2018 will be maintaining incentive discipline, coming off a year when incentive spending per unit reached the highest level ever recorded," King said.
This January has 25 selling days, one more than January 2017.
Edmunds says Toyota Motor Sales U.S.A. will pace the industry with a 7.7 percent gain, while Cox believes Volkswagen Group of America will be the big winner with an 8.9 percent increase.
Among the Detroit 3, analysts expect sales to rise at General Motors and fall at Ford Motor Co. and FCA US.
Cox expects GM, Toyota Motor Sales, American Honda Motor Co., Nissan North America, Hyundai-Kia and VW Group of America will increase market share from the same period a year ago, while Ford and FCA lose share.