Auto Sales Surprisingly Up In 2018: ETF & Stocks To Buy

Though the U.S. auto industry faced tough times given higher interest rates, rising vehicle prices and threats of a global slowdown in 2018, it proved resilient by registering another year of strong sales. This is especially true as car sales rose 0.6% to 17.3 million vehicles. This marks the fourth year of auto sales exceeding 17 million, the longest such streak the industry has ever recorded.

Sales got a one-time boost from Trump administration’s tax overhaul, which gave consumers an extra amount to spend on new cars. Additionally, higher rental sales, fuel-efficient and technologically enriched vehicles, cheaper gas prices, high consumer confidence, and 50-year low unemployment led to resiliency in the industry. While sales of small sport utility vehicles rose strongly last year, sales of most other types of vehicles were either down or up only slightly.

Of the six major American and Japanese automakers, Fiat Chrysler (FCAU - Free Report) is the only company that posted the sales increase of 9% last year. Other automakers recorded declines of 6.6% for Nissan Motor (NSANY - Free Report) , 3.5% for Ford Motor (F - Free Report) , 2.2% for Honda (HMC - Free Report) , 1.6% for General Motors (GM - Free Report) , and 0.3% for Toyota (TM  - Free Report) .

What Lies Ahead in 2019?

This year is expected to be more challenging given the lingering U.S.-China trade woes and signs of a global slowdown, which will continue weighing on demand. Additionally, the effects of the tax cuts, especially for businesses buying fleets of cars, are expected to wane this year. Interest rates are set to climb higher as the Fed foresees two rates hike this year, making financing of new vehicles more expensive.

The shift in consumers, preference from passenger cars to larger and more comfortable pickup trucks and SUVs, as well as longer usage of vehicles will also be a drag on sales. Further, the attractive loan deals that many car buyers rely on have started to disappear given that interest-free loans accounted for just 5.5% of all finance plans offered by dealers in December 2018. This was the lowest level for December since 2005, according to Edmunds.

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Disclosure: contains statements and statistics that have been obtained from sources believed to be reliable but are not guaranteed as to accuracy or completeness. References to any specific ...

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