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Drop is shrugged off amid strong pricing, manageable inventory

Why the Market Isn’t Sweating the Decline in U.S. Auto Sales


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Article Highlights

  1. While sales have slipped in 2017, they’re down only about 1.5 percent through the first 11 months of the year. That’s a far cry from the plunge seen during the recession, when financing froze up and consumer confidence tanked.
  2. The decline in the U.S. auto market can be chalked up to passenger-car models falling out of favor. Instead of buying sedans, coupes and convertibles, consumers are switching to sport utility vehicles and trucks that are more lucrative for automakers.
  3. Consumers purchased about 600,000 cars and trucks to replace those that were ruined (by hurricanes), according to Jonathan Smoke, chief economist for Cox Automotive. About two thirds of those were new vehicles, and all that buying helped to clear dealer lots.

The U.S. auto industry may be closing out the first annual decline since the year GM and Chrysler went bankrupt, but it’s a long ways from carmageddon.

Investors are shrugging off the drop in demand that General Motors Co., Fiat Chrysler Automobiles NV and Ford Motor Co. have seen in their home market this year, and aren’t sweating that another industrywide decline is likely in 2018.

Here are a few of the reasons why.

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