December Auto Sales Drop – 2018 Forecast Looks Grim

December auto sales were lower than expected in the U.S., with the majority of the big vehicle manufacturers reporting a decline year-over-year. According to Wednesday (Jan. 3) reports from Reuters, the sales decline came despite steep discounts on vehicles as uncertainty over tax reform and interest rate hikes weighed on purchasing behavior during the month.

Carmaker General Motors (GM) reported a 3.3 percent decline in auto sales during the last month of 2017, hurt by a drop in fleet sales to government agencies and rental car companies. The retail sales for GM during December increased 1.8 percent, but auto sales dipped 1.3 percent for the full 2017 year. The company’s average transaction price of $35,400 came in above the $31,600 industry average, however.

According to reports, GM believes the decline will see a turnaround in the year to come.

“This year, many consumers will see their take-home pay rise because of tax reform,” said GM chief economist Mustafa Mohatarem in a statement. “That will keep the broad economy growing, and help keep sales at very healthy levels even as the Fed increases interest rates.”

Other carmakers saw similar ups and downs at the close of 2017. Ford Motors reported its numbers in December increased 0.9 percent thanks to a 17 percent jump in fleet sales. Retail sales, however, were 4 percent lower and pickup truck sales were down 1 percent from December of 2016.

Similarly, Fiat Chrysler reported an 11 percent sales decrease during the same month, with its retail sales declining 3 percent. Fleet sales were down 42 percent, which is in line with the car maker’s move to pull away from the low-margin fleet sales market. Toyota noted its sales dropped 8.3 percent in December, with the company seeing declines across all its business lines.

Overall, passenger car sales were down 12.2 percent. Lexus sales dipped 13.9 percent compared to numbers reported a year ago. Honda Motor’s sales also dropped 7 percent in December driven, in large part, by a decline in sales of passenger cars.