Total motor vehicle assemblies in the U.S. declined by 8 percent in 2017. This broke a string of seven consecutive years of annual increases in the number of total assemblies. The number of vehicles assembled in 2017 was 11.2 million units. In 2016, the total was 12.2 million units.
The forecast for 2018 calls for another decline of 4 percent in the number of motor vehicles (cars and trucks) assembled in the U.S. This will put the annual total at 10.8 million units.
The decline in assemblies will be the result of a drop in new vehicle sales, both domestically produced and imported. After seven straight years of gains in new vehicle sales, manufacturers reported a decline of about 1.8 percent in 2017, to 17.2 million cars and light trucks. This follows sales of 17.6 million units in 2016. The forecast calls for a drop of 4 percent in sales for 2018, to a total of 16.5 million units.
The seven-year stretch of growth for the auto industry from 2010 to 2016 was the longest in nearly a century. It started at the tail end of one of the industry's (and our national economy's) deepest recessions. You will recall that the Great Recession was so difficult for the U.S. auto sector that it resulted in federally backed bankruptcy reorganizations of both General Motors Co. and Fiat Chrysler. At the low point in 2009, new-car sales plunged to fewer than 11 million a year and motor vehicle assembles dropped to 5.7 million units.
Coming out of the recession, the auto sector was one of the fastest-growing segments of the whole economy. The release of pent-up demand, combined with historically low interest rates, fueled a full-sized recovery in the industry.
But the positive factors that pushed the uptrend since the end of the Great Recession peaked in 2016. Interest rates are now rising steadily, and pent up consumer demand has largely been sated. After seven straight years of sales gains that were substantially more robust on average than the growth in the overall economy, it was only a matter of time until the auto market became saturated. The latest data show there are now 1.26 vehicles on the road for every licensed driver, the highest ratio ever.