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7 months ago
CORRECTED-WardsAuto sees 2017 U.S. auto sales 17.2 mln, 17.4 mln in 2016
December 8, 2016 / 3:44 PM / 7 months ago

CORRECTED-WardsAuto sees 2017 U.S. auto sales 17.2 mln, 17.4 mln in 2016

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(In second paragraph, corrects Stoddard's first name to Haig, not Haag)

By Bernie Woodall

DETROIT, Dec 8 (Reuters) - U.S. auto sales will fall to about 17.2 million new vehicles next year from an expected 17.4 million in 2016, to be followed by further softening in 2018, industry consultant and publication WardsAuto said on Thursday.

WardsAuto analyst Haig Stoddard said 2018 will be the near-term basement for U.S. sales, and that they will rise slightly in 2019, but not match the records reached in last year and this one.

Stoddard, speaking at WardsAuto industry conference, said consumer discounts as a percentage of selling prices for new vehicles have been at record highs in recent months.

Automakers' ability to hold off pushing sales by continuing to increase profit-eating discounts would be tested in the early months of 2017, he said.

Paul Traub, senior business economist at the Federal Reserve Bank of Chicago, also pointed to automakers' discipline on consumer discounts as a key to coming auto sales levels.

"I'm kind of concerned about the steps the auto companies are making now" in raising consumer discounts to keep pace with record auto sales of about 17.4 million this year and last. Automakers are likely stealing sales from future months with their large incentives presently, he said.

Traub said he would advise automakers to abandon efforts to maintain market share with consumer discounts, also called incentives. Rather, they should let the overall economic trendlines work themselves out over time, given that auto sales near 17 million are healthy enough, he said.

Traub, who said he would not comment on the likelihood of a rise of interest rates this month by the Fed, said the rise of 3-year old vehicles with negative equity being traded in for new vehicles was a "dangerous slope in my mind."

Traub referred to the increase in the length of new-vehicle loans, which reached an average of 68 months in the third quarter, according to a report this week from Experian, from 67 months a year earlier.

General Motors Co is poised to make the largest U.S. market share gains in the coming years, because of a fresher lineup, including new versions of its mainline pickup trucks, Stoddard said.

Stoddard said Ford Motor Co is pretty much stuck in place when it comes to U.S. market share, due to fewer new products than its Detroit rival GM.

Reporting by Bernie Woodall; Editing by Frances Kerry

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