Bloated Inventories, Rising Incentives Signal Auto Market May Have Reached Peak SUV

SANTA MONICA, Calif., June 28, 2017 -- After five straight years of market share gains, the SUV segment may be poised for a slowdown, according to a new analysis from Edmunds, the leading car shopping and information platform. While incentive spending overall is up 23 percent so far in 2017 compared to 2016, incentives on SUVs are up as much as 47 percent. And despite these attractive offers and relatively strong demand, SUVs are now starting to linger longer in the showroom. Between January and May of 2017, an SUV sat for an average of 61 days on the dealer lot before it was sold, compared to 56 days for the same time period in 2016.

"For the last few years, SUVs almost seemed to sell themselves. But as the market starts to level off, automakers are having to work a little harder and make the deals a little bit sweeter to hit their sales targets," said Edmunds Executive Director of Industry Analysis Jessica Caldwell. "The silver lining is that SUV demand isn't completely hitting the wall, but even this hot segment isn't immune to the dip the entire market is experiencing this year."

Even though the auto market is softening, Edmunds expects that strong economic conditions and enticing deals will be enough to rally sales in the back half of the year. Edmunds analysts maintain their forecast that 17.2 million vehicles will be sold in 2017, representing a 2 percent decline from 2016's record high, and the fourth best auto sales year in U.S. history.

Edmunds forecasts that 1,479,042 new cars and trucks will be sold in the U.S. in June for an estimated seasonally adjusted annual rate (SAAR) of 16.6 million. This reflects a 2.3 percent decrease in sales from May 2017 and a 2.3 percent decrease from June 2016.

"While six straight months of sales declines sounds troubling, June is sandwiched between two major holiday sales events, which makes it a bit of a gloomy month historically," said Caldwell. "Car shoppers are savvy enough to know automakers push the deals on holiday weekends and are willing to hold off on buying until they know they're getting a hot bargain."

Edmunds estimates that retail SAAR will come in at 13.2 million vehicles in June 2017, with fleet transactions accounting for 20.2 percent of total sales. An estimated 3.2 million used vehicles will be sold in June 2017, for a SAAR of 38.6 million (compared to 3.3 million – or a SAAR of 38.6 million – in May).

More insight into recent auto industry trends can be found in the Edmunds Industry Center at http://www.edmunds.com/industry-center/.

About Edmunds
Edmunds is a leading car information and shopping platform, helping millions of visitors each month find their perfect car. With products such as Edmunds Your Price, Your Lease and Used+, shoppers can buy smarter with instant, upfront prices for cars and trucks currently for sale at more than 13,000 dealer franchises across the U.S. Edmunds' in-house team of unbiased car-shopping experts provide industry-leading vehicle reviews and shopping tips, as well as welcome all car-shopping questions to the free Shopper Advice line at 1-855-782-4711, via email at help@edmunds.com, via text at ED411 and on Twitter and Facebook. The company is regarded as one of America's best workplaces by Fortune and Great Places to Work. Edmunds is based in Santa Monica, California, and has a satellite office in downtown Detroit, Michigan.