Panel: U.S. Car Sales Boom Is Ending, But When?

U.S. car sales could set another record this year, but analysts say a downturn looms.

A panel at this week’s Management Briefing Seminars in northern Michigan cautions that sales are already being propped up with increased incentives and renewed attention to lower-margin fleet sales. They tell attendees at the Center for Automotive Research event that a downturn is inevitable, but they don’t agree when it will come.

Car and light truck sales last year rose nearly 6% to a record 17.47 million vehicles. Jeff Shuster, senior vice president of forecasting for LMC Automotive, says sales have already peaked. He expects deliveries this year, including those to fleets, will dip to 17.4 million units.

Schuster adds that retail sales to consumers—which ignore fleet sales and are considered a more accurate indicator of the market’s health—will likely shrink 1.5% this year.

Other panelists foresee a new sales high in 2016. A bullish Steven Szakaly, chief economist for the National Automobile Dealers Assn., predicts deliveries are headed for 17.7 million units this year. Mustafa Mohatarem, the chief economist at General Motors Co., anticipates full-year sales total of about 17.6 million units.

Michael Robinet, forecasting chief for IHS Markit, predicts sales of 17.5 million vehicles this year and further growth in 2017. Citi Research analyst Itay Michaeli concurs.

CAR Chief Economist Sean McAlinden says sales could reach 17.7 million this year. But he believees that the industry’s increasing reliance on incentives will give way to a sharper downturn that cuts volume nearly one-third over the next few years. The market’s seven years of uninterrupted growth, he declares, “is coming to an end.”