While there are still 12 days left until the end of 2018, automotive business associations are already putting forth some numbers for total vehicle sales in 2019, and the numbers are looking a little glum. The National Automobile Association’s annual sales forecast, released late last week, is predicting that 16.8 million passenger vehicles will be sold in 2019, which represents a 1.1 percent decline from this year. If it’s correct, it will be the first time since 2014 that sales figures will drop below 17 million.
“We’re forecasting sales of 16.8 million new cars and light trucks in 2019,” said Patrick Manzi, NADA senior economist, at an industry briefing. “This would represent a falloff in sales of about 1.1 percent compared to 2018.”
Once 2018 wraps up, analysts do expect this year to cross the 17 million mark. The sales market has been slightly more robust than predicted, possibly due to lower-than-expected gasoline prices. It also helps that consumers are still hot for SUVs and trucks and shying away from lower-priced sedans.
“This was unexpected. We were expecting sales to fall off a little more than they have this year, but then the new tax law was passed which put more money in the pockets of consumers and they certainly purchased new vehicles at dealer showrooms,” Manzi added. “The majority of these sales, following the trend of past years, have been light trucks, such as crossovers, pickups and SUVs.”
NADA is forecasting that the slippage in sales will be due to a combination of factors it calls “price creeping.” This consists of disappearing incentives and rising interest rates. More would-be buyers will simply be priced out of the vehicle market.
“If incentives continue to go down and interest rates go up, it will put tremendous pressure on consumers with rising monthly payments,” Lutz added. “The level of interest rates moving forward will be a wildcard. Customers who are returning to the store this year and may have leased a car or purchased a car three to four years ago at a very low interest rate and are hoping to keep their payment roughly the same will not be able to do that, because the cost of borrowing has gone up considerably.”