U.S. light-vehicle sales will fall 1.2 percent to 16.8 million next year as slower job growth, lower consumer spending and affordability weigh on demand, the National Automobile Dealers Association said in a forecast released Tuesday.
New-car and light-truck deliveries have dropped 1.4 percent through November, according to Automotive News Data Center estimates, but the industry remains on track to generate sales in excess of 17 million units for a record fifth year in a row, helped in part by higher discounts and higher fleet shipments that have offset lower retail volume. A year ago, many analysts, citing rising interest rates, expected 2019 sales to fall below 17 million for the first time since 2014.
Rising new-vehicle prices have discouraged some shoppers and forced buyers to look at used vehicles, even as interest rates have stabilized, and job growth, consumer spending and the overall economy remain on solid ground, analysts say. Some lenders have also begun tightening lending standards for car buyers.
"At this time last year, the Fed was on a path of increasing interest rates, and we expected that rates would continue to climb throughout the year," NADA senior economist Patrick Manzi said. "The Fed changing course on interest rates helped some consumers with vehicle affordability issues, as well as provided relief for dealers struggling with steadily increasing floorplan costs."
LMC and J.D. Power also see 2020 U.S. light-vehicle demand falling to 16.8 million from a projected 17.1 million units in 2019.
"As for 2019, it appears new-vehicle sales will best the expectations of most in the industry by topping 17 million units for the fifth straight year," Manzi said.
NADA expects light trucks will account for more than 70 percent of overall new-vehicle sales in 2019.
"By the end of 2020, NADA projects that three of every four new vehicles sold will be light trucks, a significant increase from a decade ago when the new-vehicle sales mix was 48 percent light trucks and 52 percent cars," the trade group said in the forecast.
"Consumers like the added practicality and ride height afforded by light trucks," Manzi added. "And crossovers, which account for more than 40 percent of the total new-vehicle market, continue to increase in fuel efficiency each year — offering fuel economy close to their sedan counterparts. In the absence of a significant spike in gasoline prices for a sustained period of time, we expect this shift in preference as permanent."