NADA staying with 17.1 million sales forecast for 2017, very strong year

NADA staying with 17.1 million sales forecast for 2017, –very strong year”

Even after weak March sales (see following article), NADA is sticking with its sales forecast of 17.1 million vehicles for 2017, Chief Economist Steven Szakaly said during a recent conference call with reporters. Although thatês down from last yearês record 17.55 million sales, Szakaly said, –17 million is still very good.”

Employment growth has been strong, said Szakaly, with 200,000 jobs created in both January and February although not in March, when the 98,000 new jobs were just above half of what economists expected. Overall, Szakaly said 2017 would be –a very strong year.” One downside, he added, is that wages have not been rising and have not kept pace with the rise in prices.

But among new-vehicle shoppers, wages have risen more than 3 percent. New-vehicle shoppers are in higher income groups, with incomes averaging above $80,000 a year. –That has helped drive transaction prices up,” Szakaly said. –They were an average $34,000 in the first quarter, up from $33,000 in the first quarter of last year.”

–Dealers are only selling new cars to 5 percent of the U.S. population,” said Szakaly. –Some were hit by the last financial crisis and are still digging out, but as a group, most were not.”

On the new-vehicle front, –I donêt see sales collapsing any time in the next two or three years,” said Szakaly. –They will plateau around 17 million.” Unknown factors, including Federal Reserve policy, could change the sales forecast, but the small rate increase expected in the near future should not affect overall sales.

Dealers are a resilient lot and have responded well to the pressure on new-car profits, Szakaly said. –The service side has seen tremendous growth. The number of service visits has doubled since 2010.” And thatês not all warranty work for recalls. In 2016, warranty repair orders were up 6 million, but paid service ROês were up 7 million.

The used-car business is strong, though sedans are under pressure, as they are on the new-car side. Used-car pricing is likely to drop, with more off-lease vehicles coming to dealer lots. –These are manageable issues,” said Szakaly. –Theyêre more of an issue for captive finance companies.”

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