December 2017 US Automotive Sales: Truck Rally Supported Recovery to SAAR of 17.85 Million

January 2018 US Automotive Sales: Slowing SAAR with Heavier Incentives

February 2018 US Automotive Sales: Sliding Down a Slippery Slope

Consumer Discretionary / Industrials

Henry Kwon

Thematic (Sector/Industry)

United states Automobiles / Thematic (Sector/Industry)

<p>December SAAR registered 17.9m units, up 2.4% sequentially but up by 1.4% YoY. In raw unit terms volumes improved by 15% sequentially but were down by 5.2% YoY.  Total annual light vehicle demand came to 17.23m units, representing a 1.8% decline despite a 4.3% increase in light truck demand whose share of the market rose to 67.7%.  The FY demand came in line with expectations so we saw no surprises through the end of the year.</p><p>Retail SAAR has been estimated at between 14.6 -14.9m units by D3 OEMs, JD Powers and Kelley Bluebook, which would be at a similar range as in December 2016.  Light trucks continued to gain share, registering 67.7% of the industry sales mix, an industry first seen since at least January, 2001.</p><div class="content-highlight"><p>Here are some quick observations regarding the December numbers:</p><ol><li><div class="content-highlight">D3 observed that the rotation into light trucks that began with increases in compact SUV and cross-overs are now becoming broader, with mid-size 3 row SUVs gaining popularity.  If this trend is supported by any Trump tax plan related buying spree for larger pickup trucks in the commercial fleet, then D3 will be better positioned going into 2018 over Asian brands.</div></li><li><div class="content-highlight">While D3 was careful not to draw quick conclusions about the potential impact of the Trump tax plan on large pickup trucks in the commercial segment of the fleet mix, a significant proportion of Q&amp;A from analysts and journalists focused on what the likely impact of the tax plan may be for 2018 in Ford's monthly sales call.</div></li><li><div class="content-highlight">Light Truck incentives have been rising at a significantly faster rate than sedan incentives since the beginning of 2016 and December was no exception.  While Average Transaction Price (ATP) rose 1.6% YoY but incentives as a percentage of ATP inched up to 11.0%, from 10.6% in December, 2016.</div></li><li><div class="content-highlight">U.S. demand continues to remain above long term trend, with inventory seeming to show signs of stabilizing with domestic cutbacks and high incentives. These are not exactly signs of robust fundamentals.</div></li></ol></div>

December SAAR registered 17.9m units, up 2.4% sequentially but up by 1.4% YoY. In raw unit terms volumes improved by 15% sequentially but were down by 5.2% YoY.  Total annual light vehicle demand came to 17.23m units, representing a 1.8% decline despite a 4.3% increase in light truck demand whose share of the market rose to 67.7%.  The FY demand came in line with expectations so we saw no surprises through the end of the year.Retail SAAR has been estimated at between 14.6 -14.9m units by D3 OEMs, JD Powers and Kelley Bluebook, which would be at a similar range as in December 2016.  Light trucks continued to gain share, registering 67.7% of the industry sales mix, an industry first seen since at least January, 2001.Here are some quick observations regarding the December numbers:D3 observed that the rotation into light trucks that began with increases in compact SUV and cross-overs are now becoming broader, with mid-size 3 row SUVs gaining popularity.  If this trend is supported by any Trump tax plan related buying spree for larger pickup trucks in the commercial fleet, then D3 will be better positioned going into 2018 over Asian brands.While D3 was careful not to draw quick conclusions about the potential impact of the Trump tax plan on large pickup trucks in the commercial segment of the fleet mix, a significant proportion of Q&amp;A from analysts and journalists focused on what the likely impact of the tax plan may be for 2018 in Ford's monthly sales call.Light Truck incentives have been rising at a significantly faster rate than sedan incentives since the beginning of 2016 and December was no exception.  While Average Transaction Price (ATP) rose 1.6% YoY but incentives as a percentage of ATP inched up to 11.0%, from 10.6% in December, 2016.U.S. demand continues to remain above long term trend, with inventory seeming to show signs of stabilizing with domestic cutbacks and high incentives. These are not exactly signs of robust fundamentals.

December U.S. Autos: FY17 Demand Ending a Streak of 7 Annual Gains