NADA predicts 2016 car sales record

US sales of new cars and light trucks will set an all-time record in 2016, according to predictions from the National Automobile Dealers Association (NADA) which also indicate that sales may then start to decline.

Steven Szakaly, NADA’s chief economist, said: “More than 17.7 million new light vehicles will be purchased or leased this year, about a 2% increase from 2015, and setting back-to-back records. It will be the seventh consecutive year of auto sales growth.”

In 2015, a record 17.4 million new light vehicles were retailed, up 5.8% from 2014, according to WardsAuto.

“We are living peak auto sales right now, and we will see one more year of that growth in 2016,” Szakaly added. “But only because of rising incentives that will keep consumers coming into showrooms. The real worry now is whether we’re starting to pull sales ahead from future years.”

Szakaly explained that, in the battle for market share, automakers are expected to increase incentives this year to manage increased manufacturing capacity, and to offset the effects of a slowing global economy, especially in emerging markets.

“Growth in places like Mexico will offer some temporary reprieve, but it won’t be sufficient to offset falling demand from Brazil, South Africa and other emerging markets. This means incentives will rise to stoke demand,” Szakaly added.

Sustained sales momentum in 2016 is also dependent on expectations that auto financing rates will remain competitive, with interest rates rising modestly – by less than 1 percentage point – by the end of 2016; wages will grow about 2.5% this year; and the economy will add more than 2 million net new jobs in 2016, Szakaly added.