The US retail automotive industry will reach 17 million in sales in 2017, hitting the mark for the third consecutive year.
So says the chief economist of the National Automobile Dealers Association, Steven Szakaly, who predicts sales of 17.1 million new cars and light trucks in 2017.
That is a decrease on the 17.4 million sales in 2016, which itself was a slight fall from 2015’s record year.
Mr Szakaly predicted a stable rather than growing market for US auto sales, saying “pent up demand is effectively spent”.
The vehicle segment mix will continue to favour light truck (light commercial) sales, which are expected to account for 60 percent of the market in 2017, and continuing the upward sales trend.
Strong economic outlook
Mr Szakaly said the overall economic outlook for the US in 2017 was strong, despite political uncertainty following Donald Trump’s election. Projected gross domestic product (GDP) growth is 2.6 percent; employment growth between 150,000 to 180,000 jobs per month, and the price for regular-grade gasoline at less than $2 per gallon.
“New vehicle sales will likely level off in response to the US market maturing, not as a result of the election,” Mr Szakaly said.
“If increased infrastructure spending happens and certain tax cuts materialise under the new administration, it will mean a better long-term outlook.”
Mr Szakaly said the potential easing of regulations relating to fuel economy would also benefit the economy.
Areas of concern
Mr Szakaly predicted rising interest rates, ever-increasing loan terms and higher vehicle transaction prices would lead to a slower but still strong sales pace in 2017.
“New car shoppers can expect a year with slightly higher interest rates on auto loans, but those increases will likely be offset by rising automaker incentives,” he said.
“Rising interest rates could also increase pressure on leasing, which for many car segments is already suffering from declining residuals and used-car values. Leasing is still expected to rise in 2017 but not at the same pace we have seen over past few years.”
Used sales to rise
NADA forecasts 15.3 million used vehicle sales for new car dealerships in 2017, compared to 15.1 million in 2016.
The total used vehicle market will exceed 40 million retail sales.