Honda Projects Declining U.S. Auto Sales to ‘Good Industry’ Pace

  • Deliveries this year may not match last year’s record
  • Industry should be healthy even in contraction, executive says

Auto sales in the U.S. may not set a record this year and will probably decline from 2015’s record in the coming years, said Honda Motor Co.’s top American sales executive.

Trends indicate that the industry will sell 17.3 million to 17.5 million light vehicles this year, compared with last year’s record of almost 17.5 million, Honda’s John Mendel told reporters Thursday on a conference call. Beyond 2017, sales should run between 16 million and 17 million, he said, barring any major shocks, such as a sharp increase in oil prices or tightening of credit.

While sales are poised to retreat after six years of growth – the longest such streak since at least World War II – automakers should be able to do well, especially those like Honda and General Motors Co., which are selling more to retail customers. Transactions with individual buyers, rather than rental-car companies and others snapping up discounted models in bulk, are the best measure of true demand, he said.

“Give me 16 and a half million all day long,’’ Mendel said. “That’s good business and a good industry.’’

He warned, however, that the industry could be sliding into a “price war,’’ as incentives jumped 12 percent this year through August, according to researcher Autodata Corp. While the absolute value of discounts rose to more than $3,000 per vehicle, they are somewhat offset by record high transaction prices as the market has shifted to larger vehicles loaded with communications and driver-assist technology. Honda’s brand incentives have dropped 22 percent this year through August, according to data provided by Honda attributed to Autodata/PAI.

Before it's here, it's on the Bloomberg Terminal.
LEARN MORE