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New-Vehicle Sales Down 2.3% in First Half of 2017

June 30, 2017

New-vehicle sales through the first six months of 2017 are expected to be down 2.3%, and high quality off-lease vehicles may be part of the reason why, according to Kelley Blue Book.

By the end of this year, 3.6 million off-lease vehicles will return to market, compared to 3 million in 2016, according to Cox Automotive data. By 2020, the number of off-lease vehicles returning to market is expected to rise to 4.6 million.

These off-lease vehicles are coming back to the used market as low-mileage, relatively new vehicles and are providing would-be new-vehicle buyers with an affordable and appealing used alternative, the company added.

“We are moving into a ‘post peak’ period for the U.S. auto industry,” said Jonathan Smoke, chief economist for Cox Automotive. “Many of the tailwinds that took the market to record sales in 2015 and 2016 are slowly becoming the headwinds that will keep new-vehicle sales in check through the end of the decade.”

Looking at various manufacturers’ performance, Subaru has been among the best performing brands this year. Through the first five months, the brand has gained the most market share among all brands without relying on heavy incentives — which has been a trend among many manufacturers lately.

Nissan is also expected to gain market share, thanks in part to model refreshes, including an all-new Rogue Sport aimed to compete in the popular crossover segment. Fleet sales and higher incentive spending have also been part of the brand’s growth strategy.

“Nissan is gaining market share by piling on incentives and eating up fleet demand others abandoned,” said Rebecca Lindland, KBB executive analyst. “As long as profitability holds up, there’s no reason to believe the brand will change strategy in the second half of the year.”

Brands that are expected to struggle this year are Chrysler, Ford, and Jeep.

KBB’s forecast for full-year new-vehicle sales is 17.1 million, down 2.5% from the record 17.5 million sold last year. Although that marks a decline, Smoke still believes that the automotive market is healthy. A 17.1 million new-vehicle sale year would still be one of the best years recorded in the auto industry, he noted.

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