DETROIT — Sales of new light vehicles in the U.S. are expected to fall below the 17 million threshold in 2020 for the first time since 2014, according to the lastest forecasts from LMC Automotive and J.D. Power.
The two market research firms said recently they expect total light-vehicle demand to slip to 16.8 million vehicles in 2020, slightly lower than the total of 17.1 million in 2019, the third consecutive annual decline after U.S. sales peaked at 17.6 million vehicles in 2016.
"Prospects for 2020 are shaping up to be quite stable, though volume is expected to be a bit lower," Jeff Schuster, president of the Americas operations and global vehicle forecasts at LMC, said.
"Manufacturers will face a lot of pressure to stand out in a crowded market with nearly 60 percent more redesigned or new entries in 2020 than there were in 2019."
While the 2020 forecast is lower, it represents another stable year, observers said, aided by multiple factors, such as affordable interest rates and low unemployment rates.
In 2019, "across all segments, the industry [was] fairly flat, which is not a bad thing," Steve Germain, CEO of Germain Motor Co., a dealership group with more than a dozen stores in Ohio, Michigan and Florida, said.
"I think that in 2020, we can expect more of the same as we did in 2019, some brands up and some brands down. I see opportunities to grow a bit and continue with the used-car business," he said.
This year, automakers plan to introduce more than 60 new or refreshed models, according to LMC and J.D. Power.
Before 2015, U.S. light-vehicle sales had topped 17 million just twice, in 2000 and 2001. The industry has now exceeded 17 million for five straight years.
As average transaction prices rise and negative equity levels remain high, affordability continues to be a concern. But in December, the average interest rate on a new-vehicle loan fell for the third straight month to 5.4%, the lowest rate since February 2018, according to Edmunds.com Inc.
"The fact that rates have been on a steady decline for the last several months bodes well for more favorable financing conditions in 2020," Jessica Caldwell, executive director of insights at Edmunds, said.
For the auto makers, mastering product development and launch cadence is crucial, Mr. Germain said.
"It's a tough call to make as far as predicting consumer expectations and desires," he said.
Pickup war rages on
One development that few would have predicted a year ago was a changing of the order in pickup sales, but Fiat Chrysler's Ram outsold the Chevy Silverado on an annual basis for the first time to rank as the industry's No. 2 full-size pickup.
"When people would shop for pickup trucks, there were only two considerations: Ford and Chevrolet," said Steve Kalafer, CEO of Flemington Car & Truck Country, a dealership group in Flemington, N.J., that sells each Detroit 3 pickup brand.
Sales of the Chevrolet Silverado finished the year down 1.7% to 575,600 vehicles.
"Ram has become such an important brand that GM has ceded their leadership," he said. "It's almost unfathomable."
Ram sales of 633,694 vehicles outpaced the Silverado by 58,094.
After FCA launched a redesigned Ram 1500 in 2018, it continued to build the previous-generation model, the Ram Classic, which weakened the Silverado's edge.
Ram then boosted its momentum by offering hefty incentives on the Classic.
Ford's F series has led the pickup segment for more than four decades and had chalked up more than 662,000 sales through September, enough to win another title as the best-selling vehicle in the U.S.
Ram has a more direct and attainable marketing strategy than Chevy, said Kalafer. "The proof is in the pudding," he said. "Would you have ever thought Ram would outsell" Silverado?
Cars versus trucks
Car sales volume continued to shrink in 2019. Many auto makers faced significant losses in the sedan market, though some of those were strategic.
General Motors' car volume, for example, plunged nearly 30%, while light-truck sales rose 4.4%. FCA's car sales fell 5.8% while its trucks were down 0.9%. Toyota and Lexus' car volume decreased 4.9%, while truck sales were flat.
"It continues the consumer trend of what we have been seeing the last three to five years. ... Consumers flipping from cars to trucks and SUVs," George Augustaitis, director of industry and analytics at CarGurus Inc., said.
As auto makers continue to launch new or redesigned pickups, crossovers and SUVs and discontinue many car nameplates, Mr. Augustaitis said, "it feels like it's starting to become a self-fulfilling prophecy."
Industrywide, light-vehicle demand in the U.S. fell 5.2% in December, according to Automotive News data center estimates, in part because of one less selling day, one less weekend and fewer fleet sales, even as incentives reach record highs.
December's volume of 1.54 million cars and light trucks sold was the weakest showing for the month since 2014, when sales tallied 1.51 million.
Car sales continued to fall last year, dropping 10 to 4.79 million, or 28% of the market. Light-truck demand rose 2.8% to 12.3 million vehicles in 2019. Among key segments, compact and large cars (down 16% and 19%, respectively) showed the biggest declines, largely reflecting discontinued models at Ford and GM.
The reintroduction of the Ford Ranger made midsize pickups a true battleground again, and helped the segment expand 22% last year.