New car sales drive over 17 million

The National Automobile Dealers Association (NADA) has pushed its prediction for new car sales in 2016 to well over 17 million, with the increase driven by moderate wage growth, declining gasoline prices and continued low interest rates on auto loans.

“New light-vehicle sales will rise to 17.71 million units in 2016, a 2.3% increase from our forecast of 17.3 million sales in 2015,” Steven Szakaly, NADA’s chief economist said. “This would mark the seventh straight year of increasing US new-vehicle sales.”

However, Szakaly cautioned that without heavy incentives, new-vehicle sales are likely to peak next year.

“In the long run, new-vehicle sales cannot be sustained above 17 million units because of rising interest rates, increasing regulatory compliance costs and wage and income pressure. While we expect 2016 to be an excellent sales year, we forecast new-vehicle sales falling to 17.2 million units in 2017,” he said.