Fewer incentives, harsh weather slow new car sales in January

Incentive programs from auto makers are expected to be reined in this year, leading to a tapering off of sales, according to one analysis of the industry.

January saw a sharp drop in sales compared to both December, which was expected, and to the same time last year. California-based Edmunds, a shopping and information platform, forecasts that 1,121,932 new cars and trucks will be sold in the U.S. in January, for an estimated seasonally adjusted annual rate (SAAR) of 16.7 million.

This is a 29.8 percent decrease in sales from December 2017 and a 1.4 percent decrease from January 2017.

"With that said, you have to keep in perspective December is the strongest month of the year and in January there is traditionally a post holiday lull in sales," Jeremy Acevedo, an analyst with Edmunds, told Mega Dealer News.

The company expects sales figures to be lower in 2018 than last year. But there has been a drop off in recent years in the wake of the post-recession highs, Acevedo said.

Auto makers are also pulling back on incentives, the analyst said, adding that the tapering off is not precipitous. He added that sales of SUVs have outperformed those of other vehicles. 

"In January, automakers are expected to pull the reins in on the more generous incentive programs that we saw at the end of 2017," Jessica Caldwell, executive director of industry analysis at Edmunds, said in a statement. "However, it's typical to see a slowdown at dealerships in January following the high-selling holiday months. This isn't necessarily a solid indicator of the direction that the year is headed in terms of overall sales."

Sluggish January sales are also expected as a result of severe winter weather in many parts of the country, according to the company.

"The bomb cyclone that tore through the East Coast at the beginning of the month certainly didn't help an already slower sales month," said Caldwell.

GM leads in sales with a January forecast of 204,225 compared to 308,539 the previous month. It is followed by Ford with an expected 158,704 sales, down from the 240,910 in December.

Edmunds is a car information and shopping platform, helping millions of visitors each month find their perfect car.