DETROIT — Auto executives and experts are confident that the industry's good times will continue this year despite a 1.8 percent decline in U.S. new light-vehicle sales in 2017 that ended a seven-year growth streak.
Contributing to the calmness are sound economic trends and a trifecta of positive signs: moderate inventory levels, average transactionprices in the mid-$30,000s and consumer preferences that point to more profitable sales.
Most automakers and industry experts predict sales this year will decline from 17.25 million vehicles in 2017 — the fourth-highest sales ever after a record 17.55 million in 2016 — to a still robust range of 16.7 million to 16.9 million.
It's "still a healthy industry demand level, supported by positive economic conditions and, specific to the auto industry, still welcoming credit conditions and high incentive levels," said Christopher Hopson, manager of North America light-vehicle forecasting for IHS Markit, which forecasts sales of 16.9 million in 2018.
Even so, some industry watchers say the market remains vulnerable to a steeper downturn.
"We do have some concerns that headwinds are growing," said Charlie Chesbrough, senior industry insights director for Cox Automotive. "It's a mixed blessing when we look into 2018."
Among the risk factors that could bite into new-vehicle sales: a record number of off-lease vehicles, rising interest rates and the just-enacted tax law, which is expected to put more money into consumers' pockets but also could prompt the Federal Reserve Board to raise rates faster than expected to check inflation.
Those concerns are in addition to possible fluctuations in gasoline prices, consumer confidence and incentive spending.
Average incentive spending for the industry rose 9.7 percent to $3,672 per vehicle sold in 2017, according to Autodata Corp.
Many automakers, including General Motors and Hyundai, increased incentive spending upward of 20 percent to end the year, while smaller players such as Mazda and Mitsubishi went even higher to push the industry average for December up 5.7 percent to $3,980 per vehicle, according to Autodata.
"Collectively, automakers are bracing for slower sales in 2018 with lower overall production volume, which should allow for a pullback on elevated incentive levels," said Eric Lyman, chief industry analyst for ALG.