NADA analysts predict the increasing fuel efficiency of light-duty pickups and CUVs such as the BMW X4 will continue to push more consumers away from car segments.  - Photo courtesy BMW Group

NADA analysts predict the increasing fuel efficiency of light-duty pickups and CUVs such as the BMW X4 will continue to push more consumers away from car segments.

Photo courtesy BMW Group

TYSONS, Va. — The National Automobile Dealers Association released its annual new-vehicle sales forecast for 2020, predicting U.S. dealers will move fewer than 17 million units for the first time since 2014.

Read: November Sales Report Pushes 2019 Total Closer to 17M

“We expect new light-vehicles sales will come in at 16.8 million units for 2020, roughly a 1.2% drop from 2019 sales volume,” said NADA senior economist Patrick Manzi. “As for 2019, it appears new vehicle sales will best the expectations of most in the industry by topping 17 million units for the fifth straight year.”

Analysts found that, as in 2018, consumers continued to abandon car segments in 2019. Light trucks are on track to account for more than 70% of overall new-car sales for 2019, while cars will account for less than 30% of new-car sales.

“Crossovers, which account for more than 40% of the total new vehicle market, continue to increase in fuel efficiency each year.”

By the end of 2020, NADA projects that three of every four new vehicles sold will be light trucks, a significant increase from a decade ago when the new-vehicle sales mix was 48% light trucks and 52% cars.

“Consumers like the added practicality and ride height afforded by light trucks. And crossovers, which account for more than 40% of the total new vehicle market, continue to increase in fuel efficiency each year — offering fuel economy close to their sedan counterparts. In the absence of a significant spike in gasoline prices for a sustained period of time, we expect this shift in preference as permanent,” Manzi added.

While the Federal Reserve delivered three interest rate cuts in 2019, Manzi noted, rates remained at current cycle highs for the first half of the year.

Read: November Auto Loan Interest Rates Hit 21-Month Low

“At this time last year, the Fed was on a path of increasing interest rates and we expected that rates would continue to climb throughout the year. The Fed changing course on interest rates helped some consumers with vehicle affordability issues, as well as provided relief for dealers struggling with steadily increasing floorplan costs.”

Consumer spending, a significant contributor to U.S. GDP growth, is more notable over past years. U.S real personal consumption expenditures have grown an average of 2.5% each month through October of 2019, down slightly from 3.1% during the same period in 2018.

“Consumer spending has certainly helped propel the current U.S. economic expansion into the longest expansion on record,” Manzi said. “Looking at 2020, aside from potential fallout from trade disputes, there isn’t anything on the horizon that would suggest an end to this expansion.”

Read: NADA: Franchised Dealership Payrolls Up Nearly 2%

Originally posted on Auto Dealer Today

0 Comments