U.S. automakers are ramping up promotions ahead of Black Friday to clear out bulging inventories and reassure investors that business is solid.
The biggest promotions are on sedans, compact cars, and sports cars as consumers shift to pickup trucks and SUVs.
Shares of General Motors, Ford Motor, and Fiat Chrysler are flat to down for the year. And some investors worry this is one more sign the six-year auto sales boom in the United States is slowing, and that sustaining sales levels will require even more aggressive price cutting.
“We expect auto sales to continue to be pretty strong. It will be very competitive, and we’ll probably still see strong incentives, and we’ll probably automakers cut production, especially on the car side, because trucks and sport utilities are more popular than cars. We might see them make some production cuts to keep the inventories down and not do outlandish incentives, but it will be much more competitive market in the next couple of years, but still pretty strong,” Michelle Krebs, senior analyst at AutoTrader said.
The final numbers on how deep the discounts will go are still unclear, but J.D. Power data on new-vehicle discounts shows that, on average, GM and Fiat Chrysler will discount their vehicles by about five thousand dollars.
The cuts could pay off in sales. Industry consultants JD Power and LMC Automotive both say it is possible that 2016 will top last year’s record high for U.S. autosales.
