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7/6/2016 | 2 MINUTE READ

North American Auto Sales Will Tap On the Brakes in 2017

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After spiking thanks to pent-up demand following the Great Recession of 2009, automotive sales will slow in coming years.

 

That’s the outlook from Haig Stoddard, an industry analyst for WardsAutomotive who has covered the market 30 years. Stoddard spoke at injection molding and automation supplier Engel’s first ever U.S.-hosted Automotive Trend.Scaut event on June 29 in Livonia, Mich.

 

Stoddard expected light vehicle sales of 21 million in North America (consisting of the U.S. Canada and Mexico) for 2016, in line with the record set in 2015. The U.S. accounts for about 85% of North America’s total volume, and Stoddard sees this year as the peak, as pent-up demand lingering from the 2009 recession has mostly been satiated.

 

In the U.S., forecast sales for 2016 are 17.6 million, up from 17.4 million in 2015, although when he spoke, Stoddard said the market was running at a 17.4 million rate. Stoddard still believed it would move higher since during a normal cyclical downturn, the “industry doesn’t want to let go,” and it allows production to more greatly outstrip demand.

 

On the plus side, Stoddard said there are still a lot of old vehicles on road, including many that are not WiFi enabled, which could push consumers into newer models. He also believes interest rates will stay lower, easing financing, and said there will be more drivers, including more young adults moving out of their parents’ homes, who will need vehicles. In fact, Stoddard said the U.S. adds 2 to 3 million licensed drivers per year.

 

On the potentially negative side, Stoddard noted that the market has seen record lease volume, including accounting for more than 30% sales in first quarter, meaning there will be 3 to 4 million vehicles coming off lease this year and the next three years. This could flood the used car market, pushing shoppers to buy there. He also noted that there is uncertainly in business community, with the November presidential election and Brexit only adding to that sense of anxiety.

 

Elsewhere in North America, Stoddard said Canada can expect another record year in 2016, topping 1.9 million units, with a slowdown to come in 2017. Mexico will also see a record volume of 1.5 million units in 2016.

 

A Look Forward
In terms of a production forecast, Stoddard forecast a volume of 17.8 million light vehicles to be manufactured in North America in 2016, with a dip down to 17.1 million in 2017 and 2018, before rising back up to 17.5 million in 2019.

 

Part of that increase is the result of new plants and expansions, including new facilities in Mexico for VW, Daimler, Nissan, Ford, BMW and Toyota, plus Volvo’s planned site in Ridgeville, S.C.  

 

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