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Industry Experts Expecting A “Strong” Year for 2018

Trucks will continue to dominate the market.

by on Dec.04, 2017

NADA Chairman Mark Scarpelli believes 2018 will be a strong year, adding that he'd be happy with anything more than 16 million units in sales.

The National Automobile Dealers Association expects new vehicle sales to decline in 2018.

In a forecast released Friday, NADA predicted the sale of 16.7 million new cars and light trucks. The NADA forecast for 2018 was lower than the 17.1 million units of sales predicted by the University of Michigan’s annual economic forecast, which also predicted the U.S. economy would grow by 2.5% next year.

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“We expect 2018 to be a robust year,” said NADA Chairman Mark Scarpelli, a Chicago-area car dealer. “NADA’s 2018 auto sales forecast is indicative of a stable, healthy market for new vehicles,” he added. 

“Every dealer in America, myself included, would be thrilled with a seasonally adjusted annualized rate of above 16 million. Because it means that, one, the market is stable, and two, that demand is still healthy,” Scarpelli added.

(New vehicle sales off slightly in November. For the story, Click Here.)

“And both factors are true in this case. We are looking at a stable market where demand – particularly for light trucks, SUVs and crossovers – continues to be very healthy.”

Scarpelli also said that 2017 sales are on pace for 17.1 million new cars and light trucks, in line with NADA’s original forecast of 17.1 million, which would mark only a slight decline from the back-to-back record setting years of 2015 and 2016.

Mustafa Mohatarem, GM's economist, expects the company will have a very good 2018.

The vehicle segment mix will continue to favor light-truck sales and end 2017 with light-trucks accounting for nearly 64% of new light-vehicle sales. The light-truck market share is likely to top 65% in 2018, according to NADA senior economist Patrick Manzi.

Manzi added that the overall economic outlook for 2018 remains strong with projected gross domestic product growth at 2.6%, average employment growth around 180,000 jobs per month, and the price for regular-grade gasoline at around $2.50 per gallon.

He also noted rising interest rates, ever-increasing loan terms and higher vehicle transaction prices will likely lead to a slower but still strong sales pace in 2018.

“The influx of off-lease vehicles returning to dealerships is likely to put pressure on new-vehicle sales,” Manzi said. “However, the mix of these late-model vehicles will favor light-trucks more than past years and should be more in line with present consumer demand.” he said.

(Click Here for more about flat auto sales in October.)

The University of Michigan noted between January-July 2017, the light-vehicle sales pace averaged 16.9 million units, a far cry from 2016′s record-setting 17.5 million.

“Manufacturers tried but failed to control swelling inventories through production cuts, while keeping incentive spending in check. Starting in August, manufacturers ramped up incentives and the pace of light vehicle sales rebounded sharply, exceeding 18 million units in September-October. Still, some overstock remains, and November–December sales may exceed sustainable levels,” U-M forecast.

Overall, automakers remain optimistic.

“Through November, the auto industry remains on track to have its third consecutive year of new vehicle sales topping 17 million, in-line with our expectations,” noted Jack Hollis, group vice president and general manager, Toyota division.

General Motors officials shared Hollis’ optimism, predicting it will show very healthy inventory levels, significantly lower daily rental sales for the third year in row, and the best year in the company’s history for crossover deliveries.

“U.S. economic growth has stepped up and we expect the momentum will carry over to 2018,” added GM Chief Economist Mustafa Mohatarem.

“Employment continues to grow at a solid pace, wage growth will accelerate and consumer confidence just hit a 17-year high, so industry sales should remain strong.” Mohatarem said.

(To see more about U.S. new vehicle sales rebounding in September, Click Here.)

Charlie Chesbrough, Senior Economist for Cox Automotive, said the economic stars are aligned to support a robust vehicle market with employment, consumer confidence, housing sales and prices and the stock market in good shape.

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