US Car Sales Likely to Drop for First Time Since 2009

By Douglas A. McIntyre Updated Jan 12, 12:39PM EST · Published Apr 26, 6:35AM EDT

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US Car Sales Likely to Drop for First Time Since 2009 — © Thinkstock

[cnxvideo id=”655420″ placement=”ros”]April U.S. car sales likely sputtered. The weakening is another sign that auto sales will drop in 2017 compared to 2016. It will be the first year-over-year drop since 2009, which was in the midst of the Great Recession.

Kelley Blue Book (KBB) forecasts that April car sales will fall 3% to 1.45 million units compared to April a year ago. This will be a trend that likely continues throughout most of the year. According to KBB analyst Tim Fleming:

After a weaker-than-expected March, it’s becoming more likely that 2017 will be the first down year for the industry since 2009.

Vehicle sales in 2016 set an all-time record at just below 17.55 million cars and light trucks. The year extended a streak of year-over-year improvement that went back seven consecutive years. The most recent increases were due to a rising demand for sport utility vehicles (SUVs), pickups and crossovers. Sales of sedans and coupes on average have fallen.

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KBB expects the 2017 drop to be modest: “Kelley Blue Book’s forecast for 2017 calls for sales in the range of 16.8 million to 17.3 million units, which represents a 1 to 4 percent decrease from last year.”

April will show the continuation of extreme trends for two manufacturers. Japan’s Subaru’s will post more record sales and impressive year-over-year monthly growth. Fiat Chrysler Automobiles N.V. (NYSE: FCAU) sales will continue to fall, with April a particularly bad month. KBB noted:

Fiat Chrysler could see one of the greatest sales declines of all major manufacturers at a projected volume loss of 6 percent. The Jeep brand, now the highest volume brand for FCA, has faltered as of late and needs a solid launch for the new Compass, which recently hit dealerships. April looks to be a down month for Jeep and FCA’s overall SUV lineup, even as SUV sales are generally faring well across the industry.

Among the major manufacturers, General Motors Co. (NYSE: GM) sales are expected to fall 0.6% in April to 258,000, compared to the same month a year ago. GM continues to be the market share leader in the United States at 17.9%. Its brands include Chevy, Buick, GMC and Cadillac. Ford Motor Co. (NYSE: F) sales are expected to fall 5.5% to 217,000. Ford’s brands are Ford and Lincoln. Fiat Chrysler sales are forecast to decline 5.8% to 178,000. Fiat Chrysler brands include Fiat, Chrysler, Jeep, Dodge and Ram.

Toyota Motor Corp.’s (NYSE: TM) sales are expected to drop 4.5% to 201,000. Toyota brands include Toyota, Lexus and Scion. Honda Motor Co. Ltd. (NYSE: HMC) sales are expected to drop 4.6% to 142,000. The Honda brands are Honda and Acura. Nissan sales are expected to retreat 0.7% to 123,000. Nissan’s two brands are Nissan and Infiniti. Hyundai-Kia sales are expected to drop 4.8% to 113,000, while Subaru sales are expected to rise 5.2% to 53,000.

Volkswagen’s slow recovery is expected to barely continue in April as sales rise 0.4% to 50,500. VW’s brands are Audi, Porsche and Volkswagen.

The question remains whether 2017 will be part of a long-term trend of declining U.S. car sales. Some analysts believe that any erosion in consumer confidence would hit car sales. Others believe that so many Americans have cars that are less than three years old that the demand for additional new car sales will be undermined. Still others think that the used car market has enough late model cars in inventory that it will draw sales from manufacturers.

Whatever the cause of the 2017 decline, car manufacturers have reason to worry.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.