Auto Sales Predicted to Reach 20M in 2018

Analysts are predicting that new car sales will peak in 2018 to the tune of 20 million units.

Last year, auto sales in the U.S. grew six percent to 16.5-million vehicles and was the fifth straight year that U.S. deliveries increased after hitting a 27-year low of 10.4-million units in 2009. At the Automotive News World Congress, John Murphy, lead U.S. auto analyst in equity research with Bank of America Merrill Lynch, predicted that auto sales will reach 17.3-million deliveries this year and could reach 20-million by 2018.

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After 2018, Murphy predicts that the industry will head into a sharp downturn and cautioned automakers that now is not the time to “blow” capital investing in “willy-nilly projects.” As for this year, the analyst noted that dealers’ new-vehicle stock is normal and the population of the vehicles on the road that are 11 years old and older has increased by almost 28 percent over the last eight years. As a result, many of those older cars are likely to be replaced in the coming years.

“We expect the cycle to continue for the next two years, reaching a peak in 2018 at 20 million units,” said Murphy. “That’s a lot higher than most people are expecting but we also believe there will be a very significant downturn after that.”

[Source: Automotive News]