April US auto sales seen down nearly 2%

April 25, 2017 08:55 AM

U.S. auto sales in April likely fell almost 2 % from a year earlier, with consumer discounts remaining at levels high enough to threaten the industry's long-term health, industry consultants J.D. Power and LMC Automotive said on Tuesday. 

The consultancies also lowered their full-year 2017 forecast for new vehicle sales to 17.5 million units, from a previous forecast of 17.6 million.

April U.S. new vehicle sales will be about 1.48 million units, a drop of nearly 2 % from 1.51 million units a year earlier, the consultancies said.

The forecast was based on the first 13 selling days of the month. Automakers are expected to report April U.S. sales results on May 2.

The seasonally adjusted annualized rate for the month will be 17.5 million vehicles, flat versus the same month in 2016.

Retail sales to consumers, which do not include multiple fleet sales to rental agencies, businesses and government, were set to decline more than 0.2 % in April.

U.S. sales of new cars and trucks hit a record high of 17.55 million units in 2016. But as the market has begun to saturate, automakers have been hiking incentives to entice consumers to buy.

Fears that the U.S. auto industry has peaked were stoked earlier this month when automakers released sales figures for March that came in at an annualized rate of around 16.6 million, below market expectations of 17.2 million units.

"While industry retail sales pace remains high, it is being powered by elevated levels of incentive spending which pose a serious threat to the long-term health of the industry," said Deirdre Borrego, senior vice president of automotive data and analytics at J.D. Power.

Excessive discounts can help sell new vehicles, but undermine resale prices.

The consultancies said consumer discounts averaged $3,499 per new vehicle sold, the highest ever for the month of April. The previous record was set in April 2009, during the height of the Great Recession. 

But the average vehicle price also hit a new record for the month of $31,380.

Inventory levels at major automakers have also become a concern as sales have apparently hit a peak.

The average number of days a new vehicle sits on a dealer's lot before being sold hit 70 in the first 13 days of April, the highest level for any month since July 2009.

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