U.S. Vehicle Sales (December 2019)

Thomas Feltmate, Senior Economist | 416-944-5730

Date Published: January 6, 2020

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December vehicle sales end the year on a slightly softer note  

  • U.S. vehicle slipped to 1.36 million units (seasonally adjusted) in December. On a seasonally adjusted annualized basis, sales fell to 16.7 million (-1.7% m/m) on the month, leaving the tally for the year at 16.9 million units, down 1.7% from 2018 levels. 
  • In terms of the December split, all of the declines were concentrated in the light truck segment (-3.6% m/m), while sales of passenger vehicles rose (+1.3% m/m) modestly. 
  • Of the brands still reporting monthly figures, sales of Nissan (-29.5% y/y) and Honda (-12% y/y) were down sharply compared to year-ago levels, while Toyota (-6.1% y/y) and Subaru (-3.4% y/y) had more modest declines. Sales of Kia (+8% y/y) and Hyundai (+1.9% y/y) were higher. 

Key Implications

  • Another solid year for US vehicle sales. Despite coming in a touch below the 17-million mark, overall sales remain slightly above trend growth (16.7 million), which is impressive for this stage of the business cycle.    
  • In looking for reasons that may have contributed to December's weakness, it would appear that weak inventory certainly played a role as it fell to a 7-year low. This helped reduce the pressure on automakers to rid dealer lots of inventory, which was reflected in the fact that incentive spending fell to just 3.6% y/y, compared to the 11.2% y/y increase seen in the month prior.  
  • From a quarterly standpoint, fourth quarter sales slipped to their lowest level since late 2014. While we chalk this up to a few one-off factors (GM strike, lower incentive spending to end the year), it does imply a weaker handoff heading into 2020, as well as a smaller contribution to overall Q4 GDP growth (currently tracking 1.6%) as a result of softer consumer spending. That being said, continued income and wage gains, alongside a still robust labor market should support a level of sales in the 16.7-16.9 million range for 2020.