Morningstar

Auto Industry's Growth Streak Ends at 7 Years

GM's December sales fell year over year, while volume rose at Ford.

Securities In This Article
Ford Motor Co
(F)
General Motors Co
(GM)

Automakers closed out 2017 U.S. auto sales with December numbers reported Jan. 3. December light-vehicle sales declined by 5% year over year, but we calculate a 1.3% decline adjusting for one less selling day than December 2016.

Crossovers continue to do well at the expense of sedans, and we expect that trend to continue in 2018. Premium brands such as Lexus, Cadillac, and Lincoln all had a weak month. Ford believes consumers are valuing function over brand cachet and buying expensive SUV models such as Explorer at premium prices.

For the full year 2017, sales came in at about 17.25 million, which was the third straight year at over 17 million and the fifth time ever. The 1.8% year-over-year decline was the industry’s first annual decline since 2009. We expect 2018 sales to again decline but not severely. We continue to believe that leasing is done growing its penetration at about 30% of new vehicle sales and a continued rise in off-lease supply will in our view draw some consumers back into the used vehicle market.

Ford’s SUVs had a record year, selling just under 800,000 vehicles and a record December. Explorer’s sales rose 33% for the month for its best December since 2003 and best full year since 2005. Although Lincoln struggled with the rest of the premium market, with its December sales down 17%, the one bright spot was the new Navigator, which rose 30%.

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About the Author

David Whiston, CFA, CPA, CFE

Strategist
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David Whiston, CFA, CPA, CFE, is a strategist, AM Industrials, for Morningstar*. He covers stocks in the automotive industry, including dealerships, parts manufacturers, and automakers. He has covered the automotive industry since joining Morningstar in 2007. He writes stock reports, ad hoc reports, stock analyst notes, and builds discounted cash flow models for each company covered. He also assesses their economic moat and makes frequent television and print media appearances in local, national, and international news outlets. Key stocks covered include GM, Ford, CarMax, and all six publicly traded franchise auto dealers, such as AutoNation and Penske Automotive Group.

Before joining Morningstar in 2007, Whiston spent four years in PricewaterhouseCoopers’ New York real estate audit practice and one year in its Chicago office working on real estate acquisition due diligence, gaining experience around assessing an asset’s cash flow.

Whiston holds a bachelor’s degree in business administration with a concentration in accounting from the University of Richmond’s Robins School of Business. He also holds a master’s degree in business administration with concentrations in finance, economics, and organizational behavior from the University of Chicago Booth School of Business. He holds the Chartered Financial Analyst® designation, and he is a Certified Public Accountant and a Certified Fraud Examiner.

In 2012, he ranked first in the specialty retailers and services industry in The Wall Street Journal’s annual “Best on the Street” analysts survey. He ranked first in the same industry in 2011 .

* Morningstar Research Services LLC (“Morningstar”) is a wholly owned subsidiary of Morningstar, Inc

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