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Forecasts Suggest 2018 New Vehicle Sales Will Fall Short of 17 Million Units

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Automotive experts agree that the industry is headed for another down year in terms of new vehicle sales

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While 2018 new car sales are still set to be healthy, they won’t be quite as high as in previous years

Unless automakers manage to sell a large influx of new vehicles in the last few days of December, new vehicle sales for 2017 will likely come in at approximately 17.2 million units. This is 2% less than 2016’s record new vehicle sales, and it would be the first annual decline in automotive sales since 2009, ending the longest consecutive growth streak for the industry in nearly a century.

Annual sales don’t appear to be growing again anytime soon. In fact, current projections show that new vehicle sales during 2018 will fall short of 17 million units for the first time in four years.

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Sales predictions spanning a variety of different sources all fall somewhere in the upper 16 million range. Both the National Automobile Dealers Association and Cox Automotive predict 16.7 million new car sales for 2018. Edmunds was slightly more optimistic, with its prediction coming in at 16.8 million.

Until recently, these numbers were even lower. After the recent tax-reform bill passed both the House and Senate, Cox Automotive increased their prediction by roughly 100,000 units.

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The passing of the tax bill increased Cox’s used vehicle sales prediction by even more. Now the organization expects 39.5 million used vehicles to be sold in 2018, 200,000 more than it had initially predicted.

The new tax plan isn’t the only thing that will contribute to increased used vehicle sales next year. Dealerships are currently set to have a record number of leased vehicles returned to them in 2018, adding to their used inventories and likely resulting in numerous used vehicle incentives to lower on-lot inventory.

2018 Mazda3

Don’t expect a change in fortune for sedans in the near future

While he the additional spending power that the tax bill creates for a large portion of American households will likely increase new vehicle sales overall, it seems unlikely that it will reverse the downward sales trend that sedans are currently experiencing. With a little extra cash to spend, the majority of motorists are likely to upgrade to a more expensive truck or SUV, according to Jonathan Smoke of Cox Automotive.

As sedan sales continue to suffer, one unexpected segment is set to rapidly grow: electric vehicles. In 2017, plug-in vehicles and hybrids made up 3% of the total automotive market. Edmunds predicts the segment’s market share could grow to 4.4% in 2018.

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The majority of automakers aren’t currently too nervous about lowering sales, with many of them prepared for such a phenomenon. Right now, they are focused on another important metric: profits.

However, if declines end up being more severe than current sales projection suggest, consumers will likely see a seas of deals and incentives throughout the 2018 sales year.

News Source: Automotive News (subscription required)