LOS ANGELES (Nov. 15, 2016) — U.S. auto sales will stay above 17 million in 2017, the third straight year at or above that level, according to Steven Szakaly, chief economist of the National Automobile Dealers Association, speaking at the Los Angeles Auto Show.
Sales this year should finish up at 17.4 million, he said, falling slightly short of 2015's record of 17.47 million. 2017 sales will fall slightly to 17.1 million light vehicles.
“We are headed toward a stable market for U.S. auto sales, not a growing market,” he said. “The industry has achieved record sales and pent-up demand is effectively spent.”
But Mr. Szakaly said he believes auto sales momentum will continue through 2017, supported by solid overall U.S. economic growth, gasoline prices remaining below $2 a gallon and the shaking off of political fallout from the election of Donald Trump as U.S. president.
The NADA forecasts that new-car dealerships will retail 15.3 million used light vehicles in 2017, up from an expected 15.1 million used sales this calendar year.
By Mr. Szakaly's reckoning, that would give franchised dealers three of every eight used-vehicle transactions next year. He expects more than 40 million U.S. used vehicles to change hands in 2017.
The overall U.S. economy is expected to grow in 2017, with a projected 2.6 percent growth in gross domestic product and job growth of 150,000 to 180,000 a month.
Mr. Szakaly said he expects more growth in light trucks to offset soft car sales, with rising average vehicle transaction prices. He said potential deregulation under the Trump administration could benefit the general economy and that any easing in future vehicle fuel economy standards could help the auto industry.
But he has concerns about rising interest rates, lengthening auto loan terms and higher vehicle prices adversely affecting auto sales. Rising interest rates in particular could hamper leasing, which is already hit on the car side by falling residual values and lower used-car values.
Mr. Szakaly said he expects auto leasing penetration to increase in 2017, “but not at the same pace we have seen over [the] past few years.”
Jesse Snyder is a reporter with Automotive News, a Detroit-based sister publication of Tire Business.