February sales fall 1.1%; car sales down, incentives up
New-vehicle sales slipped 1.1 percent in February as passenger car sales fell sharply and SUV and light truck sales continued to climb.
Midsize cars fell by double digits, often despite robust incentives, AutoTrader executive analyst Michelle Krebs told the Detroit Free Press. New-vehicle innventory spiked 9 percent from February 2016, and days-to-turn was the highest since July 2009, said Edmunds.comês Jessica Caldwell.
Automakers will need to start limiting production or pump up incentives even more to keep sales from dropping, analysts said. But crossover and small SUV sales could still keep growing, Caldwell said, according to the Detroit News.
Mark LaNeve, Fordês vice president of US marketing, sales and service, called the shift from passenger cars to SUVs and light trucks an industry-wide structural change in consumer buying patterns. The move to larger vehicles started in 2010, a few months after the end of the recession, LaNeve said.
The increase in used-car inventory could also threaten new-vehicle sales, ADESA chief economist Tom Kontos told Automotive News. With used-vehicle prices depressed because of strong supply, new-vehicle buyers will have less equity in their trade-in. And they may be less enticed to buy a new vehicle if nearly new used ones are available for a good price.
The good news:New-vehicle transaction prices rose more than 2 percent as consumers bought more SUVs and CUVs, according to Kelley Blue Book. The average transaction price in February was $34,352, up from $33,595 in February 2016 but down from January 2017. The greatest year-over-year gains were reported by Ford, with average transaction prices up 6 percent for Fusion and nearly 6 percent for the F-series truck, still the best-selling vehicle in the nation.
Once again, prices are up due to the mix of sales skewing more toward SUVs and away from cars, as keeping the sales mix of SUVs-to-cars steady from last February would have resulted in flat transaction prices, said KBB analyst Tim Fleming.Download Bulletin PDF