US auto consumers tap the brakes, swerve away from small cars

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CHICAGO, Jan 4, 2019 (BSS/AFP) – Major automakers on Thursday announced
slowing 2018 sales in the US even as the industry maintained close to its
overall total from the previous year, defying expectations.

Overall, the North American auto industry maintained a healthy sales
total, boosted by low unemployment and tax cuts. A total of 17.3 million
vehicles were sold, about the same as in 2017, according to figures provided
by the analytics firm Autodata.

However, many major carmakers struggled to match 2017 sales, signaling US
consumers were pulling back, increasingly squeezed by higher interest rates
and rising price tags.

Also, Americans’ love of larger, and pricier, SUVs and trucks was not
enough to offset plummeting sedan and small car purchases.

“We are forecasting sales to slow further in 2019. For some automakers,
the slowdown has already begun,” Cox Automotive Senior Economist Charlie
Chesbrough said in a statement.

– Trucks, SUVs –

GM, the biggest of the US automakers, reported a 2.7 percent sales dip in
the fourth quarter and a 1.6 percent decline for 2018 — despite selling more
crossover SUVs.

Ford also struggled. Sales were down 8.8 percent in December to end the
year 3.5 percent lower than 2017. It, too, sold more of its larger vehicles,
including F-Series pickups.

Another industry giant, Toyota, recorded US sales declines in December and
the year — 0.9 percent and 0.3 percent, respectively.

FCA US, Fiat Chrysler’s US subsidiary, improved its annual total by nine
percent — fruits of its new focus on larger vehicles. The company’s sales
rose 14 percent in the final month of 2018.

“This year’s performance underscores the efforts we undertook to realign
our production to give US consumers more Jeep vehicles and Ram pickup
trucks,” FCA US’s sales chief Reid Bigland said in a statement.

– Further slowing in 2019 –

The overall industry sales total came in slightly above analysts’
expectations, but a slowdown was still expected to come in 2019.

Carmakers were expected to face more challenges, and research firm Edmunds
predicted the industry would sell fewer cars — 16.9 million in 2019.

The effects of the tax cuts, especially for businesses buying fleets of
cars, were expected to wane. Millions of recently leased cars also were to
come back to dealerships and compete with new cars for consumer dollars.

Those challenges were coinciding with rising prices for new vehicles and
higher interest rates.

Kelley Blue Book predicted the average new-car price was up about three
percent in 2018 to more than $36,000.

“Despite retail sales falling for the sixth consecutive month, the
continued growth in transaction prices is allowing manufacturers to offset
lower sales with higher revenue,” JD Power analyst Thomas King said in a
statement.

– Mazda, Tesla see gains –

Among other automakers, Honda boosted its December sales by 3.9 percent
but declined 2.2 percent for the year. Truck and SUV sales nudged up for the
year, but car sales plummeted.

Nissan similarly rose 7.6 percent in December but fell 6.2 percent in
2018. Its car sales fell 17 percent while truck-SUV sales gained 2.5 percent.

Mazda fared the opposite: declining 3.8 percent for December, but up 3.7
percent for the year. The brand was buoyed by unusually high gains in SUV
sales.

Tesla delivered 90,700 cars in the fourth quarter, slightly below the
91,000 expected by analysts.

It also delivered 245,240 for all of 2018, more than twice the number from
the previous year as it worked out shipping and delivery problems for its new
mid-priced Model 3 sedan.