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February Car Sales Expected to Fall 3%, With Chrysler Plunge and VW Surge

Douglas A. McIntyre

Experts have been worried that the U.S. car industry cannot continue to grow annually. Results this year have started to calm that anxiety. Car and light truck sales are expected to fall by 3.3% in February but hold at an annual sales rate of close to 17 million. The manufacturer that will suffer the most is Fiat Chrysler Automobiles N.V. (FCAU), the sales of which are forecast to drop 7.6%. Volkswagen sales are expected to rise about 14% as the company begins to recover from its diesel engine output scandal.

According to Kelley Blue Book (KBB), February sales will total 1.3 million cars. KBB analyst Tim Fleming commented:

Retail growth for manufacturers will be tough to achieve in February, as consumer demand remains relatively flat despite increased incentives. Regardless of the expected dip in overall volume, at a SAAR of more than 17 million, the sales pace for the industry is healthy, and more importantly, looks to be sustainable as we head into the high volume selling months ahead.

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None of the three largest car companies based on U.S. sales are expected to do well. General Motors Co. (GM) sales, which include its Cadillac, GMC, Buick and Chevrolet brands, are expected to tail off 2.2% to 223,000. GM holds slightly more than 17% of the American market. Ford Motor Co. (NYSE: F) sales, which include Ford and Lincoln, are expected to fall 5.6% to 204,000. Toyota Motor Corp. (TM) sales, including Toyota, Scion and Lexus, are expected to drop 6.9% to 175,000.

Fiat Chrysler's 7.6% drop will take its February sales down to 173,000, according to the KBB forecast. The company sells Fiat, Chrysler, Jeep, Ram and Dodge brands. The research firm gave the reasons for its calculations:

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Fiat Chrysler could see one of the biggest sales declines for the month, with volume dropping most on its car models. Car volume is down largely due to the wind down of the Chrysler 200 and Dodge Dart. Also, after many years of steep growth, the Jeep brand is running into headwinds, although the Renegade small SUV is drawing positive attention. Jeep also will soon benefit from the upcoming second generation Compass, which will replace the aging Compass and Patriot.

VW's U.S. sales, which include Volkswagen, Audi and Porsche, will remain tiny compared to all other major manufacturers, but at least they are on the mend. VW is expected to sell 43,000 cars, up 14.4%. The German giant has only 3.3% of the American market.

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The other car company expected to do well is Subaru, which has posted solid gains in sales for the past two years. Its unit sales are expected to rise 4.7% to 44,000. Fleming commented:

Subaru of America sales will be lifted by its crossover utility vehicles like the Outback and Forester, as it heads toward another record month. In addition, the all-new Impreza, which is now on sale, will provide a short-term boost to the automaker, but longer-term prospects for the small car segment remain bleak. Subaru has aggressive growth targets for 2017, but they currently stand in a great position as the brand with the lowest incentive spending and fastest-selling inventory in the industry.

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If sales trends hold at current levels, KBB forecasts that 2017 U.S. sales should be 16.8 million to 17.3 million. That would keep them near all-time record levels.

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