Americans have driven auto sales to their highest total in years, and analysts predicted more of the same for 2016.
Sales of new cars and trucks in 2015 hit 17.47 million, toppling the previous record of 17.35 million set in 2000. Analysts attributed the gains to a strong economy, interest rates that were at historic lows and higher consumer confidence.
“They feel a bit wealthier and more comfortable making a long-term commitment to a vehicle purchase,” said Michelle Krebs, senior analyst at Autotrader. “This is the sixth year of year-over-year increases in sales, and that’s unprecedented.”
Auto manufacturers rolled up big sales numbers despite a brisk year for recalls. Problems included Volkswagen’s surprisingly polluting diesel models, exploding Takata air bags in a variety of major U.S. and Japanese brands, and failing GM ignition switches.
For the full year, Fiat-Chrysler reported 2.2 million vehicles sold, up 7% from 2014. Nissan, with 1.5 million, was also up 7%.
General Motors sold 3.1 million vehicles, up 5%. Ford, with 2.6 million, was also up 5%. Toyota, with 2.5 million vehicles sold, was up 5% as well. And Honda posted 1.58 million vehicles sold, an increase of 3%.
“The auto industry is in a very strong place right now and a very positive place right now with a lot of momentum,” said Eric Lyman, vice president of industry insights at TrueCar.
Automakers with strong sales of sport utility vehicles, such as Toyota and Fiat-Chrysler, did especially well this year as baby boomers and millennials with growing families increasingly gravitated toward the roomy and versatile vehicles, Krebs said.
“Jeep was a big winner,” she said. “Jeep is just a really popular brand and iconic, and it has had huge sales increases.”
Lower gasoline prices also helped to increase buyers’ options, as well as put money back into household budgets. In November, sales of compact SUVs and crossovers totaled 2.2 million, an 18.8% increase over the year before, according to Kelley Blue Book.
“Because your operational costs are a bit lower … people might go for that SUV or a bigger engine or a bigger vehicle that’s less efficient,” Lyman said.
Overall sales were also helped by greater replacement of older vehicles, many of which are more than 10 years old, Krebs said.
“That’s the oldest we’ve ever seen in the American fleet, so people are at the point where they need to replace them,” she said.
But Wall Street’s reaction didn’t necessarily align with the record-breaking declarations of the auto industry. On Tuesday, shares of GM dropped 88 cents, or 2.6%, to close at $32.43, even though the Detroit automaker led the pack in full-year sales numbers. Ford stock also dropped 25 cents to close at $13.72.
Analysts said the less enthusiastic market response is likely due to missed expectations from December sales.
Most companies reported gains in December, with some in the double digits. Nissan’s sales jumped 19%, Fiat-Chrysler’s climbed 13%, Toyota’s rose nearly 11% and Honda’s went up almost 10%. Ford posted an 8% increase, and General Motors said its sales rose 6%.
“December was a little softer than we thought it would be,” said Jessica Caldwell, senior analyst at Edmunds.com. “It still eked out to be the strongest month in 2015.”
Although most other automakers posted gains, Volkswagen saw its numbers plummet in the aftermath of its global emissions scandal, which broke in September and affects about 11 million vehicles worldwide. The German automaker’s sales fell 5% for the year; the company suspended sales of its popular diesel vehicles in September.
The U.S. Department of Justice filed a civil complaint Monday against Volkswagen over its sale of vehicles that used software to cheat on U.S. emissions tests.
In the year ahead, automakers will have to grapple with their strategy for cars, whose sales have stagnated in many segments while SUV and truck sales have grown, said Akshay Anand, senior analyst for Kelley Blue Book. Compact car sales in November decreased slightly to 2.2 million from the year before, according to Kelley Blue Book.
Leasing contracts, which have been at record levels, could prove more difficult for sales this year. A large number of vehicle leases are set to expire, leading to questions about whether the market can accommodate an influx of these pre-owned vehicles in addition to the new cars, Krebs said.
Interest rates may also pose an issue, though Lyman of TrueCar said the effect on overall sales is expected to be negligible.
“The interest rates are going to increase in conjunction with the overall improvements in the economy, so we’re not too concerned,” he said.
Lyman said TrueCar expects continued sales growth of about 3% this year, not quite as aggressive as in the last six years. Analysts expect automakers to deliver between 17.5 million and 18 million vehicles in 2016.
“There’s still room to grow,” said Caldwell of Edmunds.com. “Sales should continue on a healthy pace.”
The Associated Press contributed to this report.