Light-vehicle sales will come close to but fall just short of 17 million units in 2015, then drop off in subsequent years, says Steve Szakaly chief economist for the National Automobile Dealers Assn.
He predicts auto sales of 16.4 million this year and 16.94 million in 2015. He credits a strong U.S. economy for annual light-vehicle deliveries that have consistently climbed from the recession year of 2009 when they dropped to a precarious 10.4 million, the lowest since 1982, according to WardsAuto.
“Rising employment and wages, continued low interest rates and lower gasoline prices all signal an increase in new light-vehicle sales in 2015,” Szakaly says.
The last time auto sales reached or surpassed 17 million was in 2006. Hitting 17 million or higher next year is possible but not probable, he says. “Everything would have to go right, and such an alignment is unlikely,” he says during a media conference call before the Los Angeles auto show.
Factors for 2015 sales to exceed NADA expectations would include ramped-up incentives and more Millennials joining the work force and buying cars more rapidly than they have in the last two years.
“The issue is that many of them came of age and graduated into the worst recession period since the second World War,” Szakaly says. “Millennials are still holding back. Many of them are in the used market. We’d like to see more of them enter the new-car market.”
He forecasts new-car sales decreasing to about 16.5 million in 2016, as demand abates and more Baby Boomers retire. That group has been a major automotive consumer force.
The U.S. essentially is “a 16 million-plus market,” Szakaly says.
Economically, 2015 should be a good year. “Gross domestic product will grow at 3.1%, with the potential for growth to exceed our forecast,” he says.
He adds: “Our forecast for employment growth is 242,000 new jobs on average per month in 2015. This improvement in the labor market should also benefit wages and incomes.”
NADA expects long-term auto-loan rates to increase in 2015, but not enough to dampen its sales outlook.
The trade group’s 2015 forecast is predicated in part on interest rates remaining low. “The Federal Reserve is expected to raise interest rates in 2015, but the rate rise will be small,” Szakaly says.
Gasoline prices also are expected to stay low through 2015, he says. “There is nothing better for consumers than a price war in any market, and that is what we are seeing now in the oil market.”
