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Several major automakers announced a sharp drop in US sales in September, a slowdown due to changes in North American trade policy and the imminent threat of import tariffs in Europe and the United States. Japan.
The industry is expected to record a 7% drop in sales in September compared to the same period last year, when full industry results were reported later on Tuesday. Analysts attribute the drop to one less selling day this month and a rise in sales last September, as buyers rushed to replace vehicles damaged by Hurricane Harvey and Irma.
Ford engine
Co.
F -1.29%
Sales in the United States decreased by 11.3%, while
Toyota engine
Corp.
TM 0.67%
and
Nissan Motor
Co.
NSANY 0.03%
also reported double-digit declines.
September slowdown
Major automakers report strong declines in their monthly sales.
Vehicle sales for September
General Motors
Co.
GM -2.60%
, which publishes only sales quarterly, said its third-quarter sales were down 11.1% from the previous year. For the month of September alone, analysts estimate that GM's sales have decreased by about 15% compared to the previous year.
Fiat Chrysler Automobiles
NV was one of the only major automakers to record an increase last month, with a 15% increase in sales to the United States compared to the same period last year, an increase driven by strong demand for its sport utility brand Jeep. The increase allowed Fiat Chrysler to sell better than Ford last month, for the first time in more than 10 years.
Weak sales results come as the US auto industry is already facing cost pressures on several fronts. The new US tariffs on imported steel and aluminum have pushed up the prices of these materials, which has had negative consequences, and a new North American trade agreement could increase costs for some car manufacturers whose cars do not are not in compliance with the new duty-free rules.
The new deal – officially called the United States-Mexico – Canada agreement – requires automakers to build more of their cars in North America and better-paid workers. The new content requirements may complicate operations for automakers who build small cars in Mexico, where wages are low, and import parts such as engines and transmissions overseas.
"We could see the cost of producing a vehicle increase," said Charlie Chesbrough, senior economist at Cox Automotive.
If costs are passed on to the consumer, the demand for new cars may decline at a time when the US car market is already cooling after seven years of uninterrupted growth.
A proposed 25% tariff on imported vehicles and parts also threatens to drive up car prices and further damage German and Japanese automakers. The Trump administration is still trying to figure out if it can impose the tariff through a national security act and must make a decision by February.
Rising interest rates and rising prices for new cars are driving more and more customers into the used car market, where lease returns have been flooded in recent years. This increases the supply of low-mileage opportunity cars, only one or two years old and generally in good condition, but can be purchased at a great price compared to a new car.
Nevertheless, the leaders of the automotive sector are encouraged by the major economic trends that they believe will continue to support sales throughout the year.
"Job growth, consumer confidence (is high), there seems to be a little more discretionary income available and tax reform has allowed people to have a little more flexibility," said Jack Hollis , General Manager of Toyota North America.
Write to Adrienne Roberts at [email protected]
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