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Lean inventories, lower incentives are priorities

As sales slip, factories stay disciplined

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Article Highlights

  1. That second-half slowdown nearly everyone predicted — even as first-half sales were outpacing 2017 levels — has turned up right on schedule.
  2. U.S. light-vehicle sales fell an estimated 3.7 percent in July and the seasonally adjusted annual rate slipped to 16.73 million — the weakest monthly SAAR since Hurricane Harvey upended the industry last August. It was the first time this year the annual selling rate has dipped below 17 million.
  3. "We've been expecting the market to make a change, and really, that's because we expect the buying conditions to get worse over the year," said Charlie Chesbrough, senior economist for Cox Automotive. "Affordability continues to be a growing issue," he said. "We think it may be pushing some [new-] car buyers into the used market, where they can pick up a three-row crossover or SUV for about the same price as a new car."

That second-half slowdown nearly everyone predicted — even as first-half sales were outpacing 2017 levels — has turned up right on schedule.

U.S. light-vehicle sales fell an estimated 3.7 percent in July and the seasonally adjusted annual rate slipped to 16.73 million — the weakest monthly SAAR since Hurricane Harvey upended the industry last August. It was the first time this year the annual selling rate has dipped below 17 million.

Yet automakers have so far dealt with the downturn in an adult manner — anxious, apparently, to preserve the health of the market even at lower volume.

Steering away from price skirmishes, companies are maintaining production discipline and leaner inventories that better reflect a 70/30 split of light-truck sales to cars. And they have shown a noticeable reluctance to chase market share with costly incentives.

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