STLA Stellantis NV

By Mike Colias and Nora Naughton 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (January 4, 2020).

The multiyear boom in U.S. auto sales showed signs of easing in 2019 with major car companies reporting softer results and industry executives predicting the slowdown would continue in 2020.

Auto makers reported year-end U.S. sales Friday. Analysts expect the car industry to post a decrease of 1% to 2% in U.S. auto sales for the year, once final numbers are compiled, to around 17 million vehicle sales, defying earlier predictions of a sharper decline. Those results came on the same day Tesla Inc. reported meeting a lofty sales goal in 2019, defying speculation that demand for its electric vehicles cars was dwindling.

The strong U.S. economy has buoyed many auto makers, while low gas prices and a proliferation of new sport-utility vehicles have helped steer consumers toward more expensive models, analysts and industry executives say. Cheap leases, low interest rates and longer loan terms have helped buyers fit pricier cars into manageable monthly payments, while taking on more financial risk in the process.

"Ten years ago it was like, 'Can we ever get to 17 million?' said Jack Hollis, group vice president of Toyota's North American subsidiary. "And now we're there every year."

Still, analysts and executives are monitoring potential threats to new-vehicle demand in the U.S., including rising sticker prices, analysts say. Industry forecasters expect a steeper sales drop this year, to a range of 16.5 million to 16.8 million vehicles.

Car companies are leaning more on the resilient U.S. market to fuel profits. Analysts expect the auto industry in China, the world's largest auto market, to report later this month a decline in sales in 2019 for the second straight year, after decades of growth. Sales in the European Union were steady last year, but the stricter emissions standards threaten to pinch car makers' profits, industry analysts and executives say.

Trade tensions have eased since last year's U.S.-China clash over auto tariffs and an amended North American trade pact remained unsettled. With earnings under pressure, General Motors Co., Ford Motor Co., Volkswagen AG and other auto giants embarked last year on restructurings that included tens of thousands of layoffs and factory closings.

The car industry is making costly bets on new technologies, such as electric vehicles, leading to more consolidation and alliances among auto makers. Fiat Chrysler Automobiles NV heads into 2020 with a merger agreement in hand with France's PSA Group, creating a $50 billion company that would rank among the world's largest auto makers by sales.

U.S. vehicle sales rose steadily since the financial crisis a decade ago, when they bottomed out at 10.4 million in 2009. Sales hit a record 17.6 million in 2016 and have bobbed along around the 17-million mark in recent years, providing an unusually steady environment for an industry accustomed to cyclical swings.

GM's 2019 sales fell 2.3% for the year, dented largely by last fall's 40-day United Auto Workers strike that brought more than 30 U.S. factories to a standstill and depleted dealerships' new-vehicle inventories, the company said Friday. The Detroit auto maker said its fourth-quarter sales fell 6% over the prior-year period.

Fiat Chrysler's sales in the U.S. fell 1% last year, while Toyota Motor Corp. reported a nearly 2% decline in U.S. sales. Honda Motor Co. 2019 U.S. sales were flat, while Nissan Motor Co. sales fell nearly 10%.

Ford is set to release year-end results Monday. Research firm Cox Automotive estimates the auto maker's 2019 sales fell roughly 3%.

Tesla's sales rose 50% in 2019 to 367,500 deliveries. After stumbling in its launch two years ago, its mass-market Model 3 posted a 47% sales increase in the fourth quarter alone. Chief Executive Elon Musk is counting on the Model Y compact SUV, expected to arrive this year, to drive more growth through 2020.

GM shares closed down nearly 2% Friday, more sharply than the broader market decline. Fiat Chrysler shares were down 3.5%. Ford's fell 1%.

While down slightly, U.S. sales outpaced most analysts' forecasts. Buyers continued to pay more for new vehicles, drawn by new technology and safety features as well as a growing affinity for pricier SUVs and pickup trucks. SUV sales accounted for nearly half the U.S. market through the first 11 months of 2019, according to research firm J.D. Power. Pickup trucks also gained market share, accounting for nearly a quarter of sales, while sedan sales fell to about 28%, from 35% in the same period in 2017.

The industry faces potential headwinds in the U.S. in 2020. Car dealers grappled with unusually large stockpiles of unsold vehicles for much of last year and struggled to off-load older models, forcing steeper discounts. Auto makers are spending more to lure buyers, potentially heralding weaker demand and slower sales ahead, analysts say. The industry's spending on sales incentives in recent months hovered around 11% of a car's sticker price, the highest level since 2008, according to J.D. Power.

New-car buyers increasingly are stretching to afford monthly payments on rising sticker prices, analysts say. The average price of a new vehicle reached an estimated record of $33,656 in 2019, nearly 4% higher than a year earlier, J.D. Power said. That has drawn consumers to used-car lots, which now offer more choices of SUVs and where prices have fallen in recent months, analysts and dealers say.

--Ben Foldy contributed to this article.

Corrections & Amplifications GM shares fell around 2% in Friday morning trading. An earlier version of this article incorrectly stated the fall took place Monday. (Jan. 3, 2020)

Write to Mike Colias at Mike.Colias@wsj.com

(END) Dow Jones Newswires

January 04, 2020 02:47 ET (07:47 GMT)

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