U.S. auto sales for 2016 were stunning as declining gas prices, rising employment and low interest rates lured customers to dealers’ showrooms. This year marked the industry’s seventh successive year of sales gain as total car sales for the year were 17.55 million units, compared with 17.47 million vehicles sold in 2015.
December sales spiked 3% compared to a year ago. According to Autodata, the seasonally adjusted annualized rate for the month was 18.43 million vehicles. This came in way above analysts’ expectation of 17.7 million vehicles. Auto sales are a key indicator of consumer confidence and spending in the U.S. It accounts for around 20% of the total retail consumer spending in the country.
General Motor (GM, Financial) chief economist Mustafa Mohatarem said, “Key economic indicators, especially consumer confidence, continue to reflect optimism about the U.S. economy and strong customer demand continues to drive a very healthy U.S. auto industry.”
Consumers continued to buy high-margin pickups and SUVs in December, helping automakers book more profit. Here is a look at the automakers' performances.
Performance of U.S. automakers
General Motors' December sales surged 10% to 319,108 vehicles. The company saw big gains in the small and midsize car department. Chevy Spark witnessed astonishing sales gain, while sales of Volt Hybrid and Malibu midsize were almost doubled. The combined sales of Chevy Silverado and GMC Sierra stood at 77,562 last month, down 14% as compared to December 2015. The company’s yearly sales were down 1.3%.
The second-largest Detroit automaker, Ford (F, Financial), sold 239,854 vehicles in December, up 0.3% from the comparable period last year. Ford’s sales gain was mainly powered by huge volumes of sales of the F- series pickup, which amounted to 87,512 vehicles sold. As far as the whole year is concerned, Ford sold 2.61 million cars and trucks, a meager 0.1% increase from 2015.
Fiat Chrysler (FCAM) witnessed a sales plunge of 10% in December as the company continued to rely on Jeep and Ram pickups to increase sales, thereby leading to steep declines in the company’s daily rental sales. For the year, the company managed to sell 2.2 million vehicles.
Performance of other automakers
The world’s largest automaker, Toyota Motor Corp. (TM, Financial), reported 243,229 vehicles sold in December, up 2% from December 2015. This was the company’s best ever month on the basis of volume. December sales for Lexus were down 0.5% on daily selling rate (DSR) basis. Toyota Division SUV and Toyota Division pickup witnessed impressive sales gain, up 27.6% and 2.6%. For the year, Toyota sold nearly 2.5 million vehicles, a 2% decrease.
Nissan Motor Co.'s (NSANY, Financial) sales, on the other hand, spiked 9.7% in December. Honda Motor Co.'s (HMC, Financial) sales surged 6.4%. There was a 4% decline in car sales, which was more than compensated by an 18% increase in truck sales.
Last word
Pickups and SUVs accounted for nearly 60% of the total U.S. industry’s auto sales in 2016. According to J.D. Power, consumers received an average discount of around $4,000 per vehicle, an increase of around $500 from last year. Sales incentives like these helped boost December volumes as well. The overall environment of the market remained positive however, alleviating concerns regarding a slowdown in the U.S. auto industry.
Disclosure: I do not hold any position in the stocks discussed in this article.
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