Auto Sales End a 7-Year Upswing, With More Challenges Ahead

“The market is pretty saturated right now,” said Jessica Caldwell, an analyst with Edmunds.com. She noted that there were now 1.26 vehicles on the road for every licensed driver, more than ever.

The downward sales trend is the latest challenge for the industry. Tariffs could be imposed on cars made in Mexico and Canada if the Trump administration negotiates major changes to the North American Free Trade Agreement. Manufacturers are also trying to push ahead with self-driving and electric vehicles even as it remains unclear how many they will be able to sell, and when.

The effect of rising fuel prices is also a question mark. Though still low by the standards of recent years, prices at the pump were $2.49 a gallon for regular gas on Wednesday compared with $2.35 a year ago, according to AAA.

The seven-year stretch of growth from 2010 to 2016 is the longest since the infancy of the automobile nearly a century ago, according to the automotive publisher WardsAuto. It was born out of one of the industry’s darkest periods: the deep recession that prompted federally backed bankruptcy reorganizations of General Motors and Chrysler. At the low point, 2009, new-car sales plunged to fewer than 11 million a year.

As sales climbed over the past seven years, carmakers had to worry little about keeping their plants humming. Now they are faced with the prospect of trimming production and finding ways to entice customers to buy the vehicles that are rolling off the assembly line.

Slowdown Last Year

Domestic sales of light vehicles declined in 2017 for the first time since the financial crisis to 17.2 million from 17.6 million in 2016.










“It’s challenging for every company,” said Ray Mikiciuk, assistant vice president for sales at American Honda. “It’s a lot easier to operate in a rising market.”

Last year’s drop in sales was mitigated by increased discounts and other incentives, which now equal 11.5 percent of sticker prices, up from about 7 percent a few years ago, said Mark Wakefield, global co-head of automotive and industrial at AlixPartners, a consulting firm. At some point, further increases in sales incentives could hurt manufacturers’ profits, he said.

“We are deep into a push market,” in which consumers have to be lured with…

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