With a strong close to the year, total new light-vehicle sales in 2016 are expected to reach a record 17.5 million vehicles, surpassing the previous high set in 2015 by 5,000 units, according to a forecast developed jointly by J.D. Power and LMC Automotive.
Retail sales in 2016 are forecast to close at 14.1 million units, a 1.2% decline from 14.2 million units in 2015, but still will be the sixth-highest retail sales year in history.
New-vehicle retail sales in December are projected to reach 1,332,800 units, a 0.8% increase on a selling-day adjusted basis compared with December 2015, while total light-vehicle sales are expected to reach 1,604,500 units, a 1.4% increase.
Deirdre Borrego, senior vice president and general manager of automotive data and analytics at J.D. Power, said: “This year will be remembered for strong retail sales and record transaction prices. However, elevated inventories, a slow model-year transition and record incentive levels point to the challenges the industry will face in 2017. Going forward, automakers must maintain production and pricing discipline to achieve profitability, which is easier said than done.”
Incentive spending in November eclipsed $4,000 per unit for the first time on record. December, which typically delivers the highest incentive spending level of the year, is expected to exceed the November record as manufacturers clear out old model-year vehicles and reduce inventory.
Jeff Schuster, senior vice president of forecasting at LMC Automotive, said: “We project 2016 to be another record for light-vehicle sales, but it will come down to a photo finish. Given the high level of incentives and an increase in fleet volume this year, we expect to see some payback in 2017. However, it may not be evident as the sales volume is expected to be at the same level, with variables that could tip the volume risk slightly in either direction. Positive drivers include a stronger economy with fiscal stimulus and deregulation, Volkswagen’s buyback program and a high number of lease maturities. Negative drivers include a steeper interest rate increase, potential protectionism, a potential pullback in incentive levels and used-car substitution.”
LMC is forecasting total light-vehicle sales in 2017 to be in the 17.4-17.5 million unit range, down slightly from 2016 levels by approximately 25,000 units. Retail light-vehicle sales are expected to fall 0.3% to 14.0 million units in 2017.
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