WSautohauler Photo: Western Star

Car hauling truckers take note: Auto sales expected to fall this year

Several headwinds are affecting new vehicle sales, research firm says.

If you are in the auto-hauling business, you should expect new vehicle transport volumes to decline from their record-setting pace in recent years as new vehicle sales are starting to trend downward, according to research compiled by Cox Automotive.

New-vehicle sales are expected to fall 4% year-over-year to a total of 1.275 million units in February, resulting in an estimated seasonally adjusted annual rate (SAAR) of 16.7 million, down 400,000 units from 2017, noted Charlie Chesbrough, Cox’s senior economist.

“The sales pace slowed in January, and our expectation is that February is going to be even weaker; the weakest February sales period since 2015,” he added. “February has typically been in the bottom three months of the year for new vehicle sales, as much of the market waits for the spring selling season. The number of selling days in the month is unchanged from last year, so the expected decline is not calendar driven.”

Cox’s analysts also project a number of “headwinds” will impact the auto industry. For starters, Federal Reserve interest rate increases are starting to have an effect on the economy and auto loan rates have risen to levels not seen since 2013. In addition, the recent volatility on Wall Street has likely negatively impacted vehicle buyer's confidence. Maybe most importantly, as a result of aggressive leasing strategies in recent years, there are millions of "gently used" off-lease vehicles available providing growing competition for the new-vehicle market.

However, there is still a lot of positive economic news to support a robust vehicle market. Record equity markets, low unemployment and strong consumer confidence are keeping demand for personal transportation high. And tax reform enacted in December last year should also add additional support to the vehicle market in 2018.

But the firm expects most OEMs to report lower year-over-year sales in February, with domestic brands sell slightly better than foreign makes, as buyers take advantage of model year clearance offers. Cox also expects car sales to continue their decline as consumer preference for SUVs and crossovers grows. Some decline in pickup sales is expected as buyers wait for the new 2019 models from General Motors and Ram Trucks to arrive.

“February was truck month, as every month in 2018 might well be as a batch of new trucks go on sale,” said Michelle Krebs, executive analyst at Autotrader. “February truck incentives were plentiful—Ram is cleaning out its current 1500 as it gets ready to launch its new one. General Motors launches its new Chevrolet Silverado and GMC Sierra later this year, so it is discounting the current versions.”

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