NADA forecasts 17.7 million new-vehicle sales in 2016

NADA forecasts 17.7 million new-vehicle sales in 2016

Moderate wage growth, falling gasoline prices and continued low interest rates on auto loans will drive new vehicle sales higher in 2016, said NADA Chief Economist Steven Szakaly. He forecasts sales next year of 17.7 million, a 2.3 percent increase from this yearês forecast of 17.3 million. That would mark the seventh straight year of increasing U.S. auto sales.

Szakaly cautioned that without heavy automaker incentives, new vehicle sales will likely 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,” he said. He predicts sales will fall to 17.2 million in 2017. Szakaly expects wages to grow only about 2 percent in the next 12 months and interest rates to rise by 50 to 75 basis points by the end of 2016.

For 2015, NADA has raised its sales forecast of new vehicles to 17.3 million. –At this point, the auto industry remains healthy and continues to grow on improving conditions for households,” said Szakaly. –The formation of new households is rising, which is resulting in increasing auto sales and strengthening the overall economic recovery.”