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Dec. Auto Sales Slide; ’18 Expected to Head Lower

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January 4, 2018 by   Leave a Comment

Most major automakers on Wednesday (Jan. 3) reported lower December U.S. sales as they look ahead to weaker sales in 2018 that will test pricing discipline in an industry where consumer discounts are already at elevated levels.

CNBC reported that the December numbers came in above analyst expectations, lifting the shares of General MotorsFord Motor and Fiat Chrysler Automobiles.

Analysts were also pleased that GM had cut its inventory of unsold vehicles — a concern for the industry earlier in 2017 — at the end of December to 63 days supply unsold vehicles, beating its target of around 70 days supply.

But GM said it expects the industry to sell less than 17 million new vehicles in 2018, which will be lower than the expected tally for 2017 and more than half a million vehicles shy of the all-time U.S. record of 17.55 million units in 2016. Automakers will have to contend with an ongoing shift in consumer preference away from passenger cars to more profitable pickup trucks and SUVs and an influx of millions of nearly-new, off-lease vehicles which sell at a significant discount compared to new vehicles.

Automakers are still assessing the potential impacts of rising interest rates and the sweeping tax overhaul passed by the Republican-controlled U.S. Congress last month.

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