While top-earning consumers will continue to snap up luxury vehicles loaded with high-tech features, analysts see higher expenses working against less well-heeled buyers in the longer term.
General Motors Co.’s December deliveries beat forecasts while Ford Motor Co. and Nissan Motor Co. posted surprise gains, increasing the likelihood that 2016 marked an unprecedented seventh-straight year of sales gains.
The largest U.S. automaker said deliveries gained 10%, beating analysts’ estimates for an increase of about 4.4%. Ford’s light-vehicle sales increased 0.1% and Nissan’s climbed 9.7%.
GM was the lone company among the six biggest sellers in the U.S. predicted to report an increase in December, which had one fewer selling day than the year-earlier month. If industrywide deliveries gain, or drop by less than about 2%, the full-year total will top last year’s record of almost 17.5 million.
Analysts on average project December sales will come in at a seasonally adjusted annualized rate of 17.6 million cars and light trucks, up from last December’s 17.5 million rate. The pace was 18 million in October and 17.9 million in November.
GM predicted an industry selling rate of 18.2 million for December and a full-year total of 17.5 million.
Fiat Chrysler Automobiles NV, which discontinued its compact and mid-size sedans, said deliveries fell 10%, better than a projected decline of 14%.
Auto sales for the month of December have disappointed in recent years after strong October and November results, perhaps because selling-rate factors are still “anchored in December close-out sales boosts, which have now become Black Friday promotions,” Brian Johnson, an analyst with Barclays Plc, wrote in a Dec. 28 report.
Automakers’ biggest promotions were split into two polar-opposite groups, said Michelle Krebs, senior analyst with Cox Automotive, citing research from the company’s AIS Rebates unit: slow-selling fuel-efficient models and high-margin big trucks.
GM’s mainstream Chevrolet brand offered Red Tag Sales Event discounts of more than $10,000 on heavy-duty versions of the Silverado pickup and more than $11,000 on one version of the Tahoe large SUV.
Toyota Motor Corp. and Honda Motor Co. are both expected to report deliveries slipped less than 3%.
The industry is entering 2017 with analysts projecting the first significant decline in eight years--a drop of 200,000 vehicles, about the equivalent of one factory’s production--to 17.3 million cars and light trucks. While top-earning consumers will continue to snap up luxury vehicles loaded with high-tech features, analysts see higher expenses working against less well-heeled buyers.
“We are deep in the auto cycle: rising interest rates, weakening residuals, and potential tightening in financing availability are likely to limit upside,” Barclays’ Johnson said.