Growth in automobile sales has softened since late 2016, after the expiration of a tax cut for smaller engine vehicles. Dealership inventories which ballooned in the first quarter have declined below levels of concern since July, while manufacturer stocks have only recently begun to trend down, suggesting upstream activity in the auto sector may pick up over the next few quarters. Base effects, high wholesale inventories, and slowing sales have caused output growth to decline throughout 2017, which raises longer-term concerns about overcapacity in the industry.
