DETROIT (Reuters) - U.S. auto sales will fall to about 17.2 million new vehicles next year from an expected 17.4 million in 2016, to be followed by further softening in 2018, industry consultant and publication WardsAuto said on Thursday.
WardsAuto analyst Haig Stoddard said 2018 will be the near-term low for U.S. sales, and that they will rise slightly in 2019, but through 2023 will not match records reached last year and this one.
Stoddard, speaking at WardsAuto industry conference, said consumer discounts as a percentage of new vehicle selling prices have been at record highs in recent months.
Automakers’ discipline in keeping profit-eating discounts in check would be tested in the early months of 2017, he said.
Paul Traub, senior business economist at the Federal Reserve Bank of Chicago, also pointed to the same issue as key to coming sales levels.
“I‘m kind of concerned about the steps the auto companies are making now” in raising consumer discounts to keep pace with record auto sales of about 17.4 million this year and last. Automakers are likely stealing sales from future months with their current large incentives, he said.
Traub said he would advise automakers to abandon efforts to maintain market share with discounts, also called incentives. Rather, they should let overall economic trendlines work themselves out over time, given that auto sales near 17 million are healthy enough, he said.
Traub, who said he would not comment on the likelihood of a rise of interest rates this month by the Fed, said the rise of 3-year-old vehicles with negative equity being traded in for new vehicles was a “dangerous slope in my mind.”
This week, Experian said the length of new-vehicle loans was 68 months in the third quarter, up from 67 months a year earlier.
General Motors Co (GM.N) is poised to make the largest U.S. market share gains in the coming years, because of a fresher lineup, including new versions of its mainline pickup trucks, Stoddard said.
Stoddard said Ford Motor Co (F.N) is pretty much stuck in place when it comes to U.S. market share, due to fewer new products than Detroit rival GM.
WardsAuto forecasts that through 2022 the low for U.S. auto sales will be 16.8 million in 2018. Automotive consultant LMC Automotive forecasts 17.4 million in 2017 U.S. auto sales, while Barclays is among the most conservative at 16.8 million.
(Story corrects Stoddard’s first name to Haig, not Haag in second paragraph.)
Reporting by Bernie Woodall; Editing by Frances Kerry and James Dalgleish