U.S. Markets close in 2 hrs 12 mins

New-Car Sales Continue Slide, Meaning It’s Time to Deal If You’re Shopping

Clifford Atiyeh
Photo credit: Spencer Platt - Getty Images

From Car and Driver

  • Sales of most domestic and Asian brands declined by double digits in September, even as analysts predict automakers will sell the same 17 million-plus cars that they've done since 2015.
  • Economic uncertainties and a growing used-car market aren't going to help automakers.
  • What this means to you is: Look for more incentives on new cars and better deals on pre-owned vehicles, if you haven't already found them.

New cars and car loans are getting more expensive, but there may be a happy twist for car buyers. Automakers can't sell you enough, and if the economy takes a dip, they'll be very ready to deal.

U.S. light-vehicle sales through the third quarter were down 2 percent year over year, and many non-luxury automakers are struggling. When hot brands like Jeep and Subaru take dives of 13 and 9 percent in just September, you know something's off.

Sales data tabulated by Automotive News show holes poking through an industry still in full production swing since record sales in 2015 and 2016. It's not that the auto industry is headed into freefall. Far from it: Current seasonally adjusted annual rates predict 17.2 million sales by the end of 2019, placing automakers comfortably near the place they've been for a while: 17.3 million in 2018, 17.2 million in 2017, and two consecutive years where sales topped 17.5 million. It's what happens after this year that matters.

Month after month of growth eventually must dip, which is exactly what happened at Subaru in September for the first time after month 93 of continuous growth. The almighty Outback alone dipped 13 percent during that one month, contributing to a total 9 percent drop in September. (Audi’s streak of year-over-year monthly increases ended in November 2018 after 92 months.) Most domestic and Asian brands declined by double digits in September, such as Mazda (11 percent); Kia, Chevrolet, and Ford (13 percent); Dodge and Honda (14 percent); Nissan (15 percent); and Toyota (16 percent). Infiniti ate dirt (down 44 percent), as did Tesla, at an estimated 45 percent decline. The only brand worse was Fiat, which sold just 549 cars in a 54 percent drop. It’s no wonder Fiat is culling its lineup for 2020.

Some domestic and most German luxury brands were bright spots, except for Audi, which sank 17 percent. Lincoln shot up 11 percent as Ford fell by 13 percent. Buick (up 5 percent) was the only uptick at General Motors, while Ram rose by 3 percent (and a whopping 23 percent through September). Porsche (up 2 percent), Mercedes-Benz (4 percent), and BMW (6 percent) trailed Land Rover and Volvo, which each increased by 7 percent.

Looking at the cumulative numbers through September paints a happier, but not altogether worldbeating, picture. Jeep sold nearly 200,000 Wrangler and Gladiator trucks through September, handily beating out the Wrangler alone compared to last year. But Renegade, Cherokee, and Compass sales declined, leaving Jeep at a 6 percent deficit. Fiat is tanking as usual (at 38 percent down through September). As entire divisions including all brands, FCA and GM were down just 1 percent through September. Ford went down 4 percent. Honda was flat, while Toyota dipped 2 percent and Nissan dropped by 7 percent. The VW Group, Hyundai-Kia, Volvo, Subaru, and Jaguar Land Rover each saw increases of between 1 and 5 percent.

But automakers are wary. They’re worried about conflicting EPA regulations and tariffs under President Trump, potentially higher taxes from a Democratic administration, billions earmarked for electric cars and autonomy that have yet to turn a profit, and higher loan costs that may force them to increase incentives and fleet sales (both tactics that lower margins).

The used-car market is a bigger problem, as record numbers of off-lease vehicles (typically three-year-old cars with less than 50,000 miles) flood the market. By the end of 2019, Manheim—which releases data representative of its own network of wholesale auctions—estimates 4.1 million off-lease vehicles will be on sale, compared to only 1.5 million in 2012. Among all retail used-car sales at dealerships, Manheim estimates they will increase from 19.5 million in 2019 to 20 million next year. That puts heavy pressure on new-car sales.

For shoppers, more used cars mean prices will drop for most mainstream vehicles even as new-car prices for similar models will inevitably rise. (Certified pre-owned vehicles net a bigger profit for dealerships than the automakers, which generate revenue from their finance arms.) For automakers, flat or declining monthly sales may cause them to lower production in 2020 to compensate for lower demand.

Whatever happens, the rabid growth from the past decade is ebbing. Who knows—we may have reached Peak Car.

You Might Also Like