Adding to the challenge is the potential for major changes in federal regulatory and trade policies by the Trump administration, setting up an uncertain year for an industry that has been barreling along.
“One of the problems with predicting 2017 is it is the year of unknowns,” said Michelle Krebs, an analyst with the car-shopping site Autotrader. “We are hearing a lot of different things about border tariffs and regulatory policies, but we don’t know what the whole picture looks like.”
Most major automakers are making big profits these days, as consumers replace aging cars and trucks with new models, loaded with technology, that last year sold for an average sticker price above $35,000.
Yet companies face a new set of challenges posed by slower growth, and industry executives are bracing for potential tariffs on vehicles imported into the United States from Mexico, or other adjustments in trade policies that could upset the global pipeline of parts to vehicle assembly plants.
The uncertainty extends to the market itself, which has steadily grown year after year as consumers took advantage of easy credit and better economic conditions to replace aging vehicles.
Demand, however, has leveled off, and companies are falling back on old habits to move excess inventories. Analysts reported that sales incentives were about 25 percent higher in the fourth quarter of 2016 than in the same period a year earlier, even though overall sales were flat.
That is partly because of a sustained slump in sales of small and midsize cars, which has offset the increased demand for trucks and S.U.V.s. But it forces automakers to rely on discounts to sell less popular models, adjust production plans on the fly and lay off workers at some of their factories.
General Motors, the nation’s largest automaker, has announced plans to cut shifts of workers at three assembly plants that build cars in Michigan and Ohio, and analysts expect more adjustments across the industry as companies try to better match supply with demand.
“We do expect production will likely be cut, particularly in the compact and midsize segments,” said Alec Gutierrez, an analyst with the research firm Kelley Blue Book.
The industry sold 1.69 million vehicles during the month of December, an increase of about 3 percent from the same period a year earlier, according to the research firm Autodata. The 17.55 million sold over the year was a gain of 0.4 percent.
Sales of trucks and S.U.V.s accounted for nearly two-thirds of the sales volume during December as consumers continue to turn to the larger vehicles over cars. Analysts expect the trend toward larger vehicles to continue as long as gas prices remain low.
Over all, the industry forecasts sales exceeding 17 million vehicles in the United States in the coming year, although how automakers manage shifts in demand will affect their profitability.
“The most successful automakers in the long term will be able to prioritize profitability over market share and be willing to pull back artificial support for unprofitable volume,” said Stephanie Brinkley, an analyst at the firm IHS Markit.
G.M. said its sales in December increased 10 percent, to 319,000 vehicles, although its annual sales for all of 2016 fell 1.3 percent, to 3.04 million vehicles.
The company benefited from strong demand for pickups and its biggest S.U.V.s, such as the Chevrolet Tahoe, whose sales rose nearly 17 percent last year. But G.M. exemplified the market’s split personality, as several of its smaller cars experienced sharp declines.
G.M. is expanding its S.U.V. lineup and will unveil new models at the coming Detroit auto show. Moreover, the company expects the industry to achieve near-record levels again in 2017. “Key economic indicators, especially consumer confidence, continue to reflect optimism about the U.S. economy,” said Mustafa Mohatarem, G.M.’s chief economist.
Ford Motor, the second-biggest American automaker, said it sold 237,000 vehicles in December, a slight gain from the same month in 2015. For the year, Ford reported sales of 2.61 million vehicles in the United States — essentially the same total as in 2015.
The company’s cornerstone product, the F-Series pickup, was once again the top-selling vehicle in the American market, with 820,000 trucks sold last year. But sales of Ford’s car models fell about 12 percent in 2016 from a year earlier, with products like the Focus and the Fusion posting double-digit declines.
The third major American automaker, Fiat Chrysler, reported one of its weaker months in December, as sales fell 10 percent, to 192,000 vehicles. For the full year, the company said it sold 2.24 million vehicles, a decline of less than 1 percent from the previous year.
Fiat Chrysler has substantially reduced its production of passenger cars and is busy converting car factories into truck plants. Last year, sales of its cars such as the Dodge Dart and the Chrysler 200 dropped precipitously as the company concentrated on beefing up its lineup of S.U.V.s, particularly its hot-selling Jeep models.
Foreign automakers generally reported solid months in December. Toyota, for example, said its sales increased 2 percent during the month, although it ended 2016 with a 2 percent decrease for the full year.
While the industry’s health appears closely tied to the continued demand for larger vehicles, some automakers have placed big bets on electric cars, which remain a tiny niche in the market.
In one of the most closely watched introductions in the segment, G.M. said it sold 579 Chevrolet Bolts, a new battery-powered sedan, in December, its first month of sales. By contrast, the company sold more than 54,000 Silverado pickups, its most popular product.