Steve Szakaly, Chief Economist for the National Automobile Dealers Association (NADA), predicts the industry will sell 17.1 million light vehicles this year, down from 2016’s record breaking 17.5 million vehicles sold. WardsAuto is forecasting sales of 17.3 million vehicles. This follows six years of year-over-year increases. The cyclical nature of the industry means auto sales are expected to plateau for a few years before seeing another increase as demand increases.
Even as sales begin to level-off, the average transaction price continues to rise, reaching $34,000 in the first quarter of this year, up $1,000 from the same period in 2016. That rise is attributed, in part, to a strong market demand for light trucks and utility vehicles that typically sell for more than cars.
Mr. Szakaly reports that the U.S. economy overall is in good shape, growing at about 2%, a bit below the 2.5% or 3% most economists would like to see. Also, while employment continues to grow, wages are increasing at a slower rate and haven’t kept up with price increases. Manufacturers are increasing incentives, but Mr. Szakaly believes they will NOT repeat past sins by continually increasing incentives in order to artificially spur sales.