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Carmakers Are Predicted to Experience their Own Trump Rally

November 23, 2016

Most U.S. Autos on Lots Since 2005 Has Ford Lead Output CutMost U.S. Autos on Lots Since 2005 Has Ford Lead Output Cut
A Ford dealership in East Peoria, Illinois.Photograph by Daniel Acker—Bloomberg via Getty Images

U.S. auto sales in November will be up 5% from a year earlier, making it possible that 2016 will top last year’s record high, industry consultants J.D. Power and LMC Automotive said on Wednesday.

The consultants estimated industry sales in the United States this month at 1.39 million vehicles, up from 1.32 million, helped by two more selling days than a year earlier. The seasonally adjusted annualized rate will be 17.9 million vehicles, a slide from 18 million vehicles last year.

Autodata Corp., another industry consultant, says November 2015 annualized sales were at a rate of 18.25 million, which would suggest a steeper decline this month than J.D. Power and LMC forecast.

Automakers report November U.S. sales on Dec. 1. The monthly data is viewed as an early indicator of consumer spending.

The manufacturers began their holiday sales promotions this month, hoping to cut bulging inventories of unsold cars and trucks.

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Jeff Schuster, lead forecaster for LMC Automotive, said the U.S. auto sales forecast in 2016 remains at 17.4 million vehicles, but with a bias toward the upside. That would allow a new record beyond last year’s record of 17.39 million vehicles according to WardsAuto, and 17.47 million vehicles according to Autodata.

Schuster said LMC Automotive’s forecast for U.S. sales in 2017 is also 17.4 million vehicles.

Next year is pivotal for the auto industry, Schuster said, due to the chance of a economic stimulus plan under a Donald Trump presidency and the likelihood that attractive consumer discounts, or incentives, are pulling some 2017 sales into the current year.

The U.S. economy and auto industry “could be facing a boom or bust, depending on which policies are focused on and implemented,” Schuster said.

J.D. Power lead automotive analyst Deirdre Borrego said the U.S. Thanksgiving Day holiday weekend is expected to account for one-fourth of November sales.

She also said consumer discounts on new vehicles so far in November were nearly $3,900 per vehicle, up about 15% from a year earlier and the second highest on record, behind only the September average.

Current strength in U.S. auto sales, Borrego said, “are being driven in part by elevated incentive (discount) levels, which represent a meaningful risk to the long-term health of the auto industry.”