Pub. 4 Issue 1

9 Issue 4 2016/2017 U.S. sales of new cars and light trucks will set an all-time record in 2016, said Steven Szakaly, chief economist of the National Automobile Dealers Association. “More than 17.7 million new light vehicles will be purchased or leased this year, about a 2-percent increase from 2015, and setting back-to-back records,” Szakaly said. “It will be the seventh consecutive year of auto sales growth.” Low gasoline prices and rising incentives are among the key factors that will sustain the new-vehicle sales momentum in 2016, cited Szakaly. He also explained that, in the battle for market share, automakers are expected to increase incentives this year to manage increased manufacturing capacity, and to offset the effects of a slowing global economy, especially in emerging markets. “If we we’re looking at a market with stable global growth and no increases in manufacturing, auto sales might actually fall in 2016,” he said. “But we have a situation where plants have been built, demand is slowing, and the U.S. market remains the most profitable in the world. Growth in places like Mexico will offer some temporary reprieve, but it won't be sufficient to offset falling demand from Brazil, South Africa and other emerging markets. This means incentives will rise to stoke demand.” Sustained sales momentum in 2016 is also dependent on expectations that auto financing rates will remain competitive, with interest rates rising modestly - by less than 1 percentage point - by the end of 2016; wages will grow about 2.5 percent this year; and the economy will add more than 2 million net new jobs in 2016, Szakaly added.  Source: NADA NADA Forecasts a Record 2016 BY STEVEN SZAKALY, CHIEF ECONOMIST OF THE NATIONAL AUTOMOBILE DEALERS ASSOCIATION