NADA keeps U.S. new car sales forecast at 16.94 million
The National Automobile Dealers Association Monday reaffirmed its outlook for U.S. auto industry sales to rise 3.1 percent to 16.94 million this year, despite slightly negative gross domestic product impact early this year because of bad weather and West coast port strikes.
NADA Chief Economist Steven Szakaly, in a call with reporters, said he expects U.S. auto sales in March to hit the seasonally adjusted annual rate of 16.9 million. Sales were strong in January and February and automakers will release March sales figures on Wednesday.
“We still think this is a very positive market,” he said, adding light vehicle sales will outpace overall economic growth for the sixth year.
Szakaly said he doesn’t expect the Federal Reserve to boost interest rates until September, which will be good for “motor vehicle sales throughout the very important summer selling period.”
Szakaly said U.S. wage and income growth of at least 1.5 percent to 2 percent will be critical for continued growth in new car sales. Without it, he said, there could be negative impacts to car sales late in 2015 and in early 2016.
NADA expects light truck sales to represent 56 percent of the U.S. market this year, a few percentage points higher than last year, mostly due to lower gasoline prices, Szakaly said. He said there’s been a “tremendous boom for light trucks,” though small and midsize car sales have suffered somewhat the past few months as consumers have shifted preferences to crossovers, SUVs and trucks.
“(We have) seen the market for hybrids and electric vehicles also take a slight hit over … the last few months,” he said.
The used car market also has been strong this year, with used car prices up 3.7 percent since December, said Jonathan Banks, executive analyst for NADA Used Car Guide.
Analysts including those at NADA predict used car inventory will reach pre-recession levels by 2017, as consumers increasingly trade in leased vehicles. The high inventory level and a slowdown in growth of new car sales could cause used car prices to drop.
“We’re going to see some moderation in used car prices, but we think it’s going to be slow,” Banks said.