NADA Maintains 17.7 Million Sales Forecast for 2016
Despite current economic and political uncertainties, the NADA is sticking with its original sales forecast of 17.7 million news cars and light trucks for 2016. The association's chief economist, however, predicted that total sales will drop to 17.1 million units in 2017, noting that most of the pent-up demand from the Great Recession has been satisfied.
MCLEAN, Va. — The National Automobile Dealers Association (NADA) is sticking to its initial forecast of 17.7 million news cars and light trucks for 2016, despite current economic and political uncertainties.
“We’ve had six straight years of steadily rising sales, which has been a fantastic period of growth, and vehicles per household have returned to the same level prior to the Great Recession,” said NADA Chief Economist Steven Szakaly at the Center for Automotive Research Management Briefing Seminars in Traverse City, Mich., on Tuesday. “But most pent up demand has been satisfied. For 2017, we expect new-vehicle sales to reach 17.1 million units.”
Szakaly listed the rising employment rate, leases, and cheap gas and diesel prices as reasons why sales will remain strong throughout 2016.
“For 2016, light trucks will account for about 59% of the new-vehicle sales market and cars will account for 41%,” he said. “Leases are increasing, which now accounts for more than 34% of the market."
He added that although interest rates on auto loans are expected to increase by about 0.50%, consumers shouldn’t notice the change due to automakers rolling out incentives to counteract the higher rate.
While slightly higher interest rates won’t do much to curtail new-vehicle sales, Szakaly did have some ideas of what could. “The aging vehicle fleet discourages long-term vehicle sales; average loans terms for new vehicles have risen to 68 months; and new-vehicle transaction prices are continuing to rise, up about 3% this year, while wages remain stagnant.”
Millennials, he concluded, will be the greatest growth factor for new-vehicle sales in the foreseeable future. “Until millennials come of age with higher wages, get married and have children, the auto industry will experience stagnant growth periods.”
Originally posted on F&I and Showroom
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