The auto industry had its best March since 2000, but today’s sales figures come amid signs that the demand for vehicles might finally be leveling off after one of the best stretches in the industry’s history.
American consumers bought 1.6 million vehicles in March, up three percent over last year. The last three months have all produced year-over-year increases compared to 2015, a year in which the auto industry set an all-time record for vehicles sold.
But the seasonally adjusted annual sales rate fell to 16.5 million in March, according to Wards Auto. That figure is a million vehicles short of economist predictions, and represents the first time the annual sales rate has fallen below 17 million in a month since June of last year.
It seems the industry’s hot streak – which included December’s sales rate of 18 million – might be coming to an end.
“The industry has lost a lot of its tailwinds,” said Robert Brusca, chief economist at FAO Economics. “I think a lot of the positives are waning.”
During and after the recession, consumers held off on purchasing vehicles. This drove the age of the American auto fleet to its highest mark ever in 2014. Since then, strong job growth, access to credit and lower gas prices spurred consumers to make vehicle purchases they had been putting off for years.
This month’s sales figures could indicate that car buyers have finished making up for lost time.
“Consumers have worked through a lot the pent up demand,” said Ryan Sweet, director of real time economics at Moody’s Analytics.
While the hot streak may be over, the auto industry is still set for a solid year as the job market continues to improve. Today’s jobs report showed 215,000 jobs were added to the economy in March, beating expectations. Wages inched up as well. The unemployment rate rose a tenth of a percentage point, but that was due to large numbers of people returning to the labor market, a good sign for the economy.
“I think auto sales are at a steady state now, as long as you have job growth the way it’s going,” said Scott Brown, chief economist at Raymond James Financial. “The foundations are much better than they were before the recession.”
In spite of total sales numbers missing expectations, some automakers had record months. Nissan sales rose 13 percent while reporting the best month in its history. Hyundai also set a record for monthly sales, although the South Korean automaker’s sales rose just 0.4 percent. Honda saw a 9 percent jump in sales.
The big three American automakers enjoyed gains as well. Both Ford and Fiat Chrysler had their highest March sales in a decade. General Motors’ overall sales were up just .9%, but that number was hurt by the company’s efforts to reduce fleet sales. Retail sales were up 6%.
The recent trend toward light trucks, a vehicle category that includes SUVs, pickups and crossovers, continued in March. Light truck sales rose more than 11 percent while car sales declined by 6 percent.
This growing preference for light trucks, which are usually more expensive than cars, helped raise the average transaction price 2 percent over last year, according to Kelley Blue Book.
German automakers continued to suffer in the wake of last year’s emission scandal. Volkswagen sales fell 10 percent, while BMW sales dropped by 12.5 percent.
Toyota sales also fell 2.2 percent. In spite of a slight decline in company sales, and the industry falling short of expectations this month, 2016 is still a good time for dealerships nationwide.
“I don’t think in the nine years I’ve been here that we’ve sold so many cars in one month,” said Pinkal Patel, sales manager at DCH Wappingers Falls Toyota in Wappingers Falls, NY. “Customers were able to afford a lot of down payments.”