Analysis
May 23, 2017
US Vehicle Sales and NAFTA Vehicle Production through April 2017
Written by Peter Wright
Vehicle sales improved slightly from the previous month, but they were slower compared with the first quarter average and year-ago numbers. According to J.D. Power, incentive spending in April averaged about $3,500 per new vehicle—or approximately 10 percent of the average transaction price—which surpasses the previous peak for the month of April in 2009. Furthermore, inventories are becoming a concern; automakers reported that U.S. inventories in some cases exceeded 90 days, which is well above the 60-day level thought to be ideal. In addition, the used-vehicle market is becoming more enticing for consumers.
In a piece written on May 19th Doug Adams summarized with these points: US auto manufacturing is credited with driving industrial production to its highest post in the past three years in April, rising 1 percent for the month. With aggregate consumer debt now above 2008 levels through the end of the first quarter, consumer spending appears to be pulling back, leaving an overhang of unsold cars. Ford and GM are addressing the issue by cutting costs, Ford through attrition and retirement incentives, GM via production pullbacks and labor furloughs on weak product lines. Consumers rather than investors are the likely beneficiaries in the near-term as incentive payouts increase to move out the supply overhang of unsold cars.
