After seven continuous years of growth in the industry, 2016 is expected to be another standout year for new car sales. But one segment is showing a little more promise than others. U.S. import brands, such as Audi, Mercedes-Benz and BMW, are expecting to break the already record-breaking numbers they achieved in 2015.
A new report from Standard & Poor predicts U.S. auto sales will approach 18 million units in 2016, surpassing the all-time high set in 2015. New car sales rose 9 percent in 2015 to 17.2 million units.
“This would mark the seventh straight year of increasing U.S. new-vehicle sales,” Steven Szakaly, the chief economist of the National Automobile Dealers Association, said in a news release.
Import and luxury cars
U.S. import car sales hit a high of $171.5 billion in the first half of 2015, according to U.S. Census Bureau data, and have showed no signs of slowing. Fueled by a red hot December, new import car sales increased 9 percent while premium luxury sales were up 2 percent in 2015. Experts attribute low gas prices, the recovering economy and pent-up demand for the growth. And despite Volkswagen’s woes, diesel engine sales remain high as environmentally friendly consumers in their 20s and 30s bought more import cars than ever before.
South Korea is expecting 2016 to be its best year for auto sales since the U.S. opened the market to its brands in 1987. Import car sales from Korean brands such as Hyundai and Kia surpassed $10 billion in 2015 for the first time ever.
“We expect sales to increase around 8.5 percent compared to last year to 255,000 vehicles thanks to the availability of a wide range of models," Park Eun-Seok, of the Korea Automobile Importers and Distributors Association, told a Korean newspaper.
Szakaly explained that automakers will offset a slowing global economy with new and improved incentives.
“We are living peak auto sales right now, and we will see one more year of that growth in 2016,” Szakaly said in a news release. “But only because of rising incentives that will keep consumers coming into showrooms. The real worry now is whether we’re starting to pull sales ahead from future years.”
There's Still Some Gas in the Tank
Still, 2016 could be the peak, according to Szakaly. The growth figures rely on several factors, including interest rates remaining low.
“In the long run, new vehicle sales cannot be sustained above 17 million units because of rising interest rates, increasing regulatory compliance costs and wage and income pressure,” he said, adding that while 2016 is predicted to be a great year, forecasts show new car sales slipping in 2017.
But no matter what, the dismal numbers seen at the start of and throughout the Great Recession are long gone, and all signs point to the fact that there is still some gas left in the economic recovery’s tank.