U.S. auto sales to top out at 20 million by 2018 Merrill Lynch

U.S. auto sales to top out at 20 million by 2018 Merrill Lynch

U.S. auto sales will peak at 20 million in 2018 as automakers race to introduce more new product. Thatês the forecast of auto analyst John Murphy in Merrill Lynchês annual –Car Wars” report. Last yearês record sales reached 17.5 million.

The reasons for Murphyês forecast, which is more optimistic than most: solid consumer confidence, steady job growth and, most important, a big jump in vehicle miles traveled.

Automakers are rushing to meet demand by ramping up their new product schedule, from an average of 38 per year to an average of 58 per year from 2017 to 2020, Murphy said. The heaviest new-vehicle introduction years will be 2019, with 70 new models, and 2020, with 68. That means the average age of new vehicles in the showroom will drop from 3.3 years in 2017 to 1.9 years in 2020. The next few years after that should settle in at 2.5 years.

The craze for crossovers will only continue, as they are forecast to reach 31 percent of the market in the next four model years, followed by trucks at 27 percent. Small, fuel-efficient cars, Murphy projects, will be just 18 percent. The forecast is, of course, for national sales. Washington area sales have historically been heavier on cars than trucks though the most recent WANADA Area Sales Report showed a slightly greater share for light trucks than cars for the first time.

In 2017 and 2018, Honda will have the greatest replacement rate, with totally redesigned versions of the Odyssey, CR-V and Accord. Over the next four years, however, General Motors is expected to have the highest replacement rate at 22 percent (up from its historical rate of 14 percent). Ford and FCA will be next at 21 percent. The Detroit Three should do well because of their concentration on crossovers and trucks, Murphy said.

Next in projected four-year replacement rate are Honda (21 percent), Nissan (19 percent) and Toyota (18 percent). But Murphy gave an uncertain forecast for Nissan, saying it was too focused on cars.

Murphy sees another economic downturn in three to five years farther in the future than some analysts have said.

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