Auto Sales End a 7-Year Upswing, With More Challenges Ahead

The auto industry’s long-running sales party has finally come to an end.

After seven straight years of growth in new-vehicle sales in the United States, manufacturers on Wednesday reported a decline in 2017, by about 1.8 percent to 17.2 million cars and light trucks.

Further dampening the mood is the consensus that 2018 will bring an even larger drop. Edmunds.com, an auto-information website, predicts that just 16.8 million light vehicles will be sold this year.

“Over all, you have to be cautious in this environment,” said Adam Silverleib, vice president of Silko Honda, a dealership in Raynham, Mass. “The industry cycle has peaked.”

Some factors that propelled the upward swing are now fading or changing course. Exceptionally low interest rates are turning higher. Fuel prices are rising again, at $2.49 a gallon for regular gas compared with $2.35 a year ago, according to AAA.

The downward sales trend is the latest challenge for the industry. Tariffs could be imposed on cars made in Mexico and Canada if the Trump administration negotiates major changes to the North American Free Trade Agreement. Manufacturers are also trying to push ahead with self-driving and electric vehicles even as it remains unclear how many they will be able to sell, and when.

The seven-year stretch of growth from 2010 to 2016 is the longest streak of rising sales since the infancy of the automobile nearly a century ago, according to the automotive publisher WardsAuto. It was born out of one of the industry’s darkest periods: the deep recession that prompted federally backed bankruptcy reorganizations of General Motors and Chrysler. At the low point, in 2009, new-car sales plunged to fewer than 11 million a year.

As sales climbed over the past seven years, carmakers had to worry little about keeping their plants humming. Now they are faced with trimming production and finding ways of enticing customers to buy the vehicles that are rolling off the assembly line.

“It’s challenging for every company,” said Ray Mikiciuk, assistant vice president for sales at American Honda. “It’s a lot easier to operate in a rising market.”

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Content originally published on https://www.nytimes.com/2018/01/03/business/auto-sales.html by NEAL E. BOUDETTE