Although NADA projects a sales dropoff of 3 percent this year, to 16.8 million new cars and trucks, senior economist Patrick Manzi said at the NADA Show that the economy is robust.
“A tight labor market continues to put upward pressure on wages, which are rising,” Manzi said. “Consumer spending, a significant contributor to GDP, remains solid.”
But rising interest rates on auto loans will put more pressure on vehicle affordability for consumers this year, Manzi added. He expects two interest rate increases in 2019.
Manzi also expects OEMs to remain disciplined with incentives this year because they have aligned vehicle production closer to demand.
Traditionally, Washington area auto sales have been more stable than the rest of the country, with fewer swings up and down because of the stable federal workforce. That pattern has already been thrown off this year with the government shutdown, and the future for federal employees remains uncertain. But many members of Congress have signaled that they are unwilling to use government workers as a bargaining chip in future budget talks with the administration.
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