2019 Auto Sales In Review - Journalist Comments

With 2019 nearly in the rearview mirror, Cox Automotive industry analysts and experts share their thoughts on some of the headlines of the U.S. automotive industry over the last year.

For more U.S. auto sales data and details, read the Cox Automotive forecast release and download the full-year forecast presentation.

From Jonathan Smoke, chief economist, Cox Automotive:
In 2019, the U.S. economy continued to see slowing growth that started in the back half of 2018 as tariffs and trade uncertainty caused manufacturing, exports and business investment to turn into drags on GDP. The consumer stepped up to keep the economy growing, as consumer spending accounted for 90% of real GDP growth in 2019. Consumers tapped a record amount of non-housing debt to keep spending on big ticket items, including automobiles, and that debt started to show signs of worry through rising severe delinquencies and defaults as we reached the end of the year. Consumers also started to become less enthusiastic about the future as the political climate heated up. Retail spending growth began to slow as we entered the fourth quarter. Collectively these trends suggest that the consumer may not be capable of single-handedly carrying the economy in 2020, which is why we are expecting another decline in new-vehicle sales.

From Charlie Chesbrough, senior economist, Cox Automotive:
Strong December sales are critical for the industry, and December sales have been hot in recent years. Sales volume this month is likely to be just enough to lift the market above 17 million units for the fifth consecutive year, down from 2018 but slightly above the 16.8 million sales we forecast back in January. Cox Automotive is predicting sales to reach 1.58 million in this final month of 2019, above the 1.55 million needed to reach the 17-million milestone. There is one less selling day in December 2019, however, so a year-over-year sales volume decline is expected.

From Zo Rahim, manager, economic & industry insights, Cox Automotive:
2019 will be a record year for fleet sales. A healthy economy fueled by consumer spending growth and favorable tax law boosted commercial and rental fleet channels. The commercial fleet channel was consistently the strongest part of the fleet market in 2019. While the fleet business was strong for most of the year, sales cooled in the fall which suggests the overall market has peaked heading into 2020. While elevated at record levels, current inventory size and wholesale trends suggest the overall fleet market will stabilize, but not grow significantly, next year.

From Karl Brauer, executive publisher, Autotrader and Kelley Blue Book:
The big growth in 2019 came from brands successfully responding to the market’s seemingly insatiable demand for SUVs. The best examples are Hyundai and Kia, two brands that were struggling to supply SUVs just a few years ago but have now fully embraced this segment. The Hyundai Palisade and Kia Telluride are the new players this year, and both are receiving widespread accolades and delivering strong sales. But previous models, including the Hyundai Kona and Kia Niro, were already bolstering the brands’ appeal with SUV shoppers.

While 2019 was strong for most brands, one big exception was Nissan and its premium brand, Infiniti. With nearly every model down in sales this year, many of them by double digits, Nissan will need a big turnaround in 2020 just to get its head above water in terms of sales and market share. Nissan proves again: A long period of heavy incentives and fleet sales, followed closely by high-profile turbulence in leadership, isn’t the best recipe for brand or financial health.

From Brian Moody, executive editor, Autotrader:
While car share seems to be stuck well below 30% now, I suspect the segment will have a slight resurgence in popularity in the coming decade. The truth is, the teenage kids of SUV owners won’t want SUVs, just like GenXers didn’t want station wagons. Younger buyers aren’t interested in the cars their parents drove, which is a hopeful opportunity for the car segment. Eventually, consumers migrate from the norm. And cars are hardly dead. Great sedans from Honda, Hyundai, Nissan and Toyota did well enough this year and drew in some buyers who moved away from the virtually-car-free Ford and Chevy dealers. As long as there are excellent sedans, there will be sedan buyers.

From Michelle Krebs, executive analyst, Autotrader:
Pickup trucks were a hot segment in 2019 due to a strong economy, low unemployment and business depreciation benefits from 2017 tax reform that continued into 2019. Kelley Blue Book’s Brand Watch, a consumer perception survey that weaves in consumer shopping behavior, recorded the highest level of pickup truck shopping since the survey started—a record 28% of new, non-luxury vehicle shoppers considered pickups in 2019.

Ford, despite its F-150 being in the twilight of its current lifecycle, reigned supreme, not only in full-size pickups, as it has for decades, but also in overall truck sales. With the Ranger added in January, Ford is will likely to beat General Motors, which endured a 40-day strike by the UAW that shut down production, in total truck sales for the first time since 2014.

The highly publicized and sometimes ugly brawl was for the No. 2 spot for full-size truck sales. At mid-year, the recently redesigned Ram 1500 sped ahead of the revamped Chevrolet Silverado to grab the No. 2 sales spot, a position it will keep for full-year 2019. This is the first time since the Ram brand was formed in 2009 that it beat Chevy in full-size pickups. Yes, Ram lured buyers with incentives and offered a mix of new and previous-gen trucks in 2019, but consumers also liked the 1500’s interior with its large screen, according to Kelley Blue Book Brand Watch. The strategy and investments worked for Ram, lifting it to #2. Critics said Chevrolet didn’t go far enough with the all-new Silverado’s interior and is paying the price.

From Akshay Anand, executive analyst, Kelley Blue Book:
This year was a good one for many carmakers despite the warning signs we’ve seen. In particular, most luxury makes had a banner year, aided by a wide selection of new SUVs. Luxury automakers with compelling compact and midsize SUVs – including BMW, Lincoln, Mercedes-Benz, Porsche, and Volvo – reaped the benefits of higher transaction well into $50,000 range. As long as there are consumers confident enough to spend significant amounts of money on vehicles, these luxury makes will benefit as they did in 2019.

From Patti Chapman, director, sales analytics, Cox Automotive:
While luxury was healthy in 2019, mainstream consumers and dealers grew increasingly concerned with the affordability of new vehicles in 2019. No wonder: In 2019, the average transaction price for a new vehicle was the highest in history, just below $40,000. The affordability issue was exacerbated by interest rates on vehicle loans, which, except for the most credit-worthy customers, did not drop despite the Fed lowering rates.

Hyundai and Kia had a great sales year, due in large part to their niche of relatively inexpensive vehicles. Plus, they added three-row crossovers that proved popular with buyers at comparatively affordable prices.

Some consumers continue to be frozen out of the new-vehicle market altogether and are buying used instead. Used-vehicles continued to be strong in 2019, and certified pre-owned is poised to set another record thanks largely to the high volume of off-lease vehicles returning to the market and an increasing share of them being SUVs, a more desirable body style for consumers.

From Brad Korner, general manager, Cox Automotive Rates & Incentives:
When it comes to incentives, this will indeed be a “December to Remember.” December puts a bow on a year of historically high incentives in terms of program volume and a near-record level of incentive spend as a percentage of average transaction price (ATP). The five-year running average of new-vehicle incentives as a percentage of ATP is 10.3%. Through November the 2019 year-to-date average was 10.72%. Notably, many brands have run above 13% over the past 5 years, well over the traditional 10% threshold. The new-norm may be 11% of ATP as automakers fight to move such a large number of available models.

Read more in the article “A December – And Year – To Remember!” by Todd Sommerville, practice leader, Cox Automotive Rates & Incentives, on the Cox Automotive Newsroom.