Toyota Says the U

Toyota Says the U.S. Auto Market Has Peaked

The U.S. auto market has peaked and will shrink this year, with manufacturers using unprecedented incentives to support passenger cars through slumping request, a Toyota Motor Corp. executive said.

Industrywide deliveries may decline to as low as seventeen million vehicles from last year’s record of about 17.Five million, according to Bob Carter, president of Toyota’s U.S. sales unit. A rapid shift in request toward sport utility vehicles at the expense of sedans is the main factor driving automakers’ mighty discounts, he said.

“Once the industry starts to get their pipelines lined up to where the consumer request is, perhaps we’ll see a little bit of relieving on some of these high incentives,” Carter said Tuesday at a conference in Fresh York hosted by the National Automobile Dealers Association and J.D. Power. Toyota’s discounts are “higher than we’ve ever experienced,” driven by light trucks reaching about sixty five percent of industry sales, up from harshly half.

After seven straight years of growth, U.S. auto sales have declined in each of the very first three months of 2017. The slowdown has contributed to a new-vehicle inventory glut, plus a flood of cars returning to the used market after their leases expire has began to depress their prices. To clear lots and buoy request for fresh autos, manufacturers have been spending an average of more than $Four,000 on incentives per vehicle, a record, according to J.D. Power.

Unhealthy Incentives

Maintaining last year’s record sales place would do long-term harm to the industry, Thomas King, a J.D. Power analyst, said at the conference. The researcher projects deliveries will likely match last year’s levels because of discount offers equal to about ten percent of the average price for fresh vehicles.

Industry sales results are “being driven by recession-era level of incentives,” King said. “You can’t have those two things coexist in a definition of a healthy industry.”

Toyota’s shares fell Two.1 percent as of 11:12 a.m. in Tokyo trading, the fattest haul on the benchmark Topix index, which slipped 1.Three percent.

Toyota’s Carter said the company is expecting industry sales will finish the year at seventeen million to 17.Two million vehicles. The company was projecting the higher end of that range as of January. A decline to the low point would be the equivalent of about two large auto plants’ worth of production.

Passenger cars won’t go back to outselling SUVs, however the arrival of redesigned versions of Toyota’s Camry and Honda’s Accord sedans may keep the segment from declining further, he predicted.

“We do believe the industry is over the top, but that doesn’t mean we’re on a sled rail down from here,” Carter said. “After what we all collectively went through in two thousand nine and 2010, it’s going to be fine.”

— With assistance by Jamie Butters

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