U.S. vehicle sales rose sharply in December, sales likely to fall slightly in 2017

The U.S. vehicle sales came in strongly in December, rising at the highest pace in 2016. The total tally of 18.3 million units permitted U.S. auto sales to set a new full-year record in 2016. For the 2016 as a whole, 17.47 million vehicles were sold in the U.S., surpassing 2015 by fewer than 69,000 units.

Out of the top eight selling brands, most of them ended 2016 on a positive note. Hyundai and FCA were the only brands that registered declines in December. Toyota and the Detroit Three automakers all registered slight drop in sales, whereas Nissan, Honda, Kia and Hyundai recorded gains.

Trucks continued to be in high demand in the December month, registering sales of more than 1 million units. This is just the second time light truck sales have reached that mark in any month on record. In 2016, light trucks contributed 61 percent to the total sales, as compared with 57 percent in 2015.

Auto sales had another spectacular year for auto sales in 2016; however, one key trend that has evidently come up is that sales are flattening and additional growth would be hard to come by. 2016 was probably the peak for auto sales, noted TD Economics in a research report.

An influx of off-lease vehicles is likely to weaken used vehicle prices, deepening competition for the new car market. In the meantime, gradually rising interest rates and less pent-up demand should also work to take some heat out of the market, stated TD Economics.

However, economic and labor market conditions would continue to be supportive of sales throughout 2016. This, along with still attractive financing conditions, should assist in keeping auto sales at a lofty level.

“We expect sales to settle in the low-17 million unit range next year.  While a step back from the previous two years, this is an impressive level that automakers can still be happy with”, added TD Economics.