Nissan’s March sales rose 13 percent to hit a record for any month in its history, a strong sign that U.S. auto sales are continuing to grow despite predictions that they have peaked.
The Japanese automaker says it sold 163,559 Nissan and Infiniti models last month, led by the Rogue small SUV. Rogue sales rose 1 percent to nearly 28,000, also setting a monthly record.
Industry analysts expect March sales to rise 7 percent to 8 percent over a year ago by the time automakers finish reporting numbers on Friday. That means sales are still growing despite predictions from some analysts and dealers that they will plateau this year. Kelley Blue Book says sales should total around 1.66 million cars and trucks, which could be the biggest number for any month since July of 2005.
“Sales in the first quarter of this year continue to expand, and the overall retail mix suggests consumers are still feeling confident,” said Eric Lyman, vice president of industry insights for the TrueCar.com auto pricing site.
Relatively low gas prices, sweet lease deals, low interest rates and easy-to-get loans are driving the increase.
But some analysts say there are troubling signs for automakers beneath what could be record numbers. Last month had two more selling days than a year ago, and spending on discounts is on the rise. Also increasing are low-profit sales to rental car companies, which some automakers use to boost their numbers.
Discount spending, while good for new-car buyers, cuts profits and hurts used car values. High incentive spending is one of the factors that led to the industry’s financial troubles in 2008. TrueCar said automakers averaged just over $3,000 in discounts per vehicle in March, up more than 10 percent from a year ago. Still, the average sales price was up 2 percent over a year ago to nearly $34,000, Kelley Blue Book said.
The incentive spending increase comes mainly because automakers are having trouble selling cars as the U.S. market shifts to trucks and SUVs, according to J.D. Power and Associates. Discounted cars can push down used car values so buyers have less to trade in, said Thomas King, a J.D. Power vice president. “Significant declines in the value of used cars would disrupt consumers’ ability to buy new vehicles,” King said in a printed statement.
Incentive spending last month rose toward recession-era levels, King said. Discounts on cars grew to 12.3 percent of the manufacturer’s sticker price last month, but truck discounts stayed stable at 8.2 percent.
Jeff Schuster, senior vice president of forecasting for the LMC Automotive consulting firm, said the March figures show that sales continue to grow.
“We’re not necessarily seeing weakness,” he said. “We’re just seeing slower growth.”
LMC is forecasting sales of 17.8 million vehicles this year, up 1.9 percent from the 2015 record of 17.5 million. Last year sales grew by nearly 6 percent over 2014.
BEFORE YOU GO…
… we’d like to ask for your support. More people are reading the Mississippi Business Journal than ever before, but advertising revenues for all conventional media are falling fast. Unlike many, we do not use a pay wall, because we want to continue providing Mississippi’s most comprehensive business news each and every day. But that takes time, money and hard work. We do it because it is important to us … and equally important to you, if you value the flow of trustworthy news and information which have always kept America strong and free for more than 200 years.
If those who read our content will help fund it, we can continue to bring you the very best in news and information. Please consider joining us as a valued member, or if you prefer, make a one-time contribution.Click for more info