US: dealers association predicts auto sales tipping in 2016 image

According to the National Automobile Dealers Association, the US auto market is going to top out in 2016, followed by a probable decline after 2017, following seven straight growth years.

The positive side is that 2015 is most likely heading towards a new all-time record and probably 2016 would dethrone the old one, says Steven Szakaly, NADA chief economist. Besides, the fallout after 2016 will not be a massive turnaround, as it was during certain previous business cycles. Still, the sales are predicted to decline after 2017 due to a combination of factors: a gradual increase of the interest rates from today’s very lows, used-car prices are also seen going down from today’s high levels and the trend to keep cars longer is now very prominent.

The dealer association believes used-vehicle quotations would go down around 4.5 percent each year in 2016 and 2017, thanks to an increased inventory of used vehicles and the pressure building from new vehicle sales, as automakers lift incentives. NADA says by 2017 the inventory of late-model used vehicles (the so-called certified pre-owned) would surge around 28 percent from the level of 2014. Either than gray predictions, the association also made some positive suppositions. The US auto sales forecast for the year has been bumped up from the initial estimate of 16.9 million units to around 17.2 million autos. For 2016, deliveries would surge even further, overtaking the record set back in 2000 (17.4 million) – reaching a total of 17.6 million vehicles. If sales continue to rise through 2016, it would be a record seven straight years of increase.

Via Forbes