Hangover from tax ‘euphoria’ hits US car buyers as sales drop

Bloomberg

Most major automakers capped the first quarter with declining US sales again in March, as the sugar high from last year’s tax cuts wore off and the economy lost steam.
Fiat Chrysler Automobiles NV, Nissan Motor Co and Toyota Motor Corp each reported deliveries dropped for the month and are down year-to-date. General Motors Co, which releases results only on a quarterly basis, said sales slumped across all four of its brands.
After downshifting in the second half of last year, economists project growth in US gross domestic product was just 1.5 percent in the first three months of the year, the lowest in three years, according to forecasts compiled by Bloomberg.
The Federal Reserve’s decision last month to put interest rates on hold may limit the damage for an auto market that’s seen borrowing costs reach a 10-year high.
“The economy is not as strong as it was a year ago,” Michelle Krebs, executive analyst for Autotrader, said by phone. “Last year we had the euphoria over tax reform, and now we have the reality of that.”
While most carmakers were down for the month, sales slipped less than analysts estimated for Toyota and Nissan, and Honda Motor Co exceeded expectations thanks in part to the all-new Passport sport utility vehicle.
Smaller automakers Subaru Corp, Hyundai Motor Co and Kia Motors Corp also posted gains despite having one fewer day to sell cars than last month, fuelling a better-than-anticipated industry selling rate of about 17.5 million, according to researcher Autodata Corp. That’s better than any analyst estimated in a Bloomberg News survey and is the best pace since December.
Shares of GM, Fiat Chrysler and Ford Motor Co, which releases its quarterly sales results, all closed higher in New York trading. Automotive News reported Ford’s sales dropped
5.2 percent, a smaller decline than analysts expected.
The sedans that have seen demand crater the last few years are showing early signs of bottoming out. Taxes are likely to continue to be a focal point for consumers leading up to the April 15 filing deadline.