American Car Sales Just Set Another Record in 2016
Subaru, Mercedes, Jaguar and Volvo win big; VW, Chrysler, Fiat and Mazda not so much.
Automakers are popping corks again in the New Year: More Americans bought a new car in 2016 than any year in history. And while a few storm clouds threaten to dampen the sales picnic, most economists see sales staying near record highs in the year to come.
According to Automotive News, consumers parked 17.54 million new cars in their driveways in 2016, squeaking past the 2015 record by just 56,000 units. Nothing could stop buyers, even as the price of the average new car reached a record $35,309 in December, according to Kelly Blue Book—a $520 jump from the final month of 2015.
Sales sprinted to the December finish and reached an annualized adjusted rate of 18.38 million, the fifth-best month of all time. Automakers such as BMW and Volkswagen—which plunked a respective $5,800 and $4,400 in incentives on the hood of every new model, according to ALG—pulled out all the stops to get people in the holiday shopping mood.
President Obama, who joined his predecessor George W. Bush in bailing out a struggling auto industry, might want to take a note for his memoirs: As the nation struggled out of the Great Recession, auto sales outpaced and helped spark that recovery, rising by roughly 1 million units on average every year between 2010 and 2015. Throw in 2016’s all-time high, and the streak of seven consecutive years of sales gains is now the longest since the boom between 1909 and 1917.
Hate to say “told you so,” but I predicted a rebound as early as 2010, when a gloomy consensus of auto analysts insisted that sales would stay in the dumps for years. My reasoning: Americans love their cars. Their current models were aging and needing replacement, and the second people stabilized their mortgages and caught even a whiff of economic security, they’d race out and buy a new car. Because, bless their loan-loving hearts, that’s what Americans do.
The strength of new “car” sales was actually driven by light trucks, which reached a record 60.9 percent of all sales. Pickups and SUVs flew out of dealerships as fast as people could pump them full of affordable unleaded. Light truck sales leapt up 7.4 percent, even as traditional cars slumped by 8.9 percent in the face of the SUV onslaught. The dominance of tailgates, tall stances and AWD was illustrated at Nissan: The division set its own American record with 1.43 million sales. And the market-friendly Rogue—one of the small-fry SUVs that Americans can’t gobble enough of—became Nissan’s best-selling model, topping the Altima sedan to post a remarkable 329,904 sales, up 15 percent from last year. The Honda brand set its own record with 1.48 million U.S. sales, just ahead of Nissan.
This was the year we said goodbye to Scion. But Toyota's shuttered brand aside, Fiat had to be the year’s biggest loser; its sales tumbling by nearly 24 percent to an anemic 33,000 units. Sergio Marchionne, chief executive of Fiat Chrysler Automobiles, may want to rethink his (to me, ill-advised) strategy of killing off cars at Chrysler and Dodge and assuming that a pantywaist like Fiat can carry the weight. All by itself, the Chrysler brand's sickening 27 percent plunge to about 231,000 units cost it nearly 90,000 sales, about triple what Fiat managed in total. Volkswagen had its own bummer year with a 7.6-percent drop to 323,000 cars, but that actually doesn’t sound so awful, considering the fallout over its diesel emissions scandal. More head-scratching is a 6.7-percent decline at Mazda to just under 298,000 cars, despite near-universal acclaim for a lineup whose new models include the CX-3, CX-9 and Miata. How is that possible, aside from the obvious—that most mainstream car buyers don't give a damn what us critics say?
Count Jaguar a winner, its sales exploded by 116 percent (albeit to just 31,243 cars) thanks largely to its first-ever SUV, the F-Pace, and the entry-priced XE sedan. A reviving Volvo surged ahead 18 percent to just under 83,000 cars, led by its strong-selling XC90.
In broken-record news, Subaru chugged ahead by 5.6 percent to about 615,000 sales, nearly as many as VW and Mazda combined. Subaru sales have now tripled in less than a decade, including eight straight years of American records. Incredibly, the brand has added just one high-volume model in the midst of that explosive growth, the compact Crosstrek.
Michael McHale, Subaru’s communications chief, recalls the company fielding its first Outback in the mid 1990’s. The mash-up of an SUV, hatchback and wagon—by luck, planning or both—perfectly presaged the brave new world of crossovers.
“We sold this thing that was car based, but jacked up to look and perform more like a truck,” McHale says. “We kind of pitched our tent and waited for the market to come to us, and it has.”
“We sold 20,000 Outbacks in December, and that’s the first time we sold 20,000 of anything, ever.”
A raft of foreign automakers and brands set their own annual U.S. records, including Audi, Porsche, Kia, Hyundai, Land Rover. Infiniti's record of about 138,000 sales may seem surprising, considering the guff it's taken from car critics, but again SUV's are driving that growth. Count Hyundai and Kia together, and the South Korean juggernaut posted 1.42 million sales, just 3,500 fewer than Nissan.
This year, the bitterly contested luxury sales race—often a fingernail-biter—wasn’t even close. Mercedes-Benz, its lineup filled with alluring newbies from the GLC-Class to the E-Class, put up 374,541 sales, a 0.4-percent gain. Mercedes’ momentum stood in stark contrast with BMW, where sales tumbled 9.5 percent to just over 313,000 cars. Lexus dipped 3.9 percent to take second place with roughly 331,000 sales; but a raft of newly design-centric models, including an all-new LS flagship to be unveiled in Detroit next week, bode well for Toyota’s luxury brand in 2017. Audi sales were modest in comparison, topping 210,000 for a 4-percent gain; but its sales have more than doubled since 2010, blowing past Cadillac, Infiniti and Acura over that short span. With the sumptuous new Q7 SUV on the march, and an all-new Q5 and larger Q8 in the works, Ingolstadt earns another gold star in the VW Group.
The Detroit Three held the fort, led by General Motors’ 3.04 million sales—down 1.3 percent from its record-busting 2015. Ford Motor Co. dipped just 0.1 percent to a touch under 2.6 million cars, though Lincoln sales rose 10 percent to about 111,000, and that with all-new Continental sedan only reaching showrooms in late fall. Fiat Chrysler Automobiles moved 2.24 million units for a 0.4 percent yearly decline, with plunging sales at Fiat and Chrysler salvaged by robust gains at the Jeep and Ram divisions. And Toyota fell 2 percent to 2.44 million units, good for third place overall, behind GM and Ford.
For all the good news, count rising sales incentives among factors that may get automakers in trouble again, along with rising inventories and interest rates, subprime shenanigans and peaking consumer demand. Overproduction is creating a glut of new and used cars, including used models coming off leases—a potentially vicious cycle that depresses residual values and makes it harder to sustain low lease payments that have that market booming. Ford and GM are already dialing back production to address slowing demand. GM will idle five plants for up to three weeks to ease swollen inventories of slow-selling cars, including plants in Ohio and Michigan plant that build the Chevy Cruze, Camaro and Cadillac’s ATS and CTS.
“I do see, if I’m honest, a lot of distress selling going on, a lot of incentives, fleet and lease,” one executive insider said. “For companies selling the wrong product, it’s hard.”
Some executives privately wonder if there will be a “Trump bounce” in the economy—perhaps via a rise in infrastructure spending and construction—or, as one put it, a “Trump splat.”
But automakers and economists are mainly gearing up for a pleasing numbers match: A 2017 that brings 17 million sales for only the fifth time in history, all since 2000.
“Flat sales is the expectation for the year,” McHale says. “But to be flat after a record year is OK.”
Lawrence Ulrich, The Drive’s chief auto critic, is an award-winning auto journalist and former chief auto critic for The New York Times and Detroit Free Press. The Detroit native and Brooklyn gentrifier owns a troubled ’93 Mazda RX-7 R1, but may want to give it a good home.