10 predictions for the US auto market in 2018 by Matthew DeBord on Jan 2, 2018, 11:41 AM 
- The US auto market could continue to boom in 2018.
- Electric cars will probably hit a plateau.
- Gas prices look like they'll remain low.
After three straight years of strong sales, the US auto market enters 2018 with a sense of trepidation. Will the good times keep rolling?
For the next 12 months, the answer looks to be a qualified "Yes." But plenty of stuff could happen, ranging from a surge of electric cars to spiking gas prices. I've put together some predictions: FOLLOW US on Facebook for more car and transportation content! US sales will probably slip for the year — giving doomsayers plenty to chew on.  Major carmakers will report December and full-year 2017 US sales this week, and the expectation is that the year will once again top 17 million in total vehicles moved, but not by much. That would be a decline for last year's record of 17.55 million, which was itself an improvement on 2016's 17.5 million. The headlines and the actual numbers have been at odds for a solid year, as month-over-month declines from 2016's torrid pace have made the overall market look far worse than it is. Anything above a 16 million pace is considered quite healthy. More importantly, a sales slide in 2016 would indicate a decline in consumer confidence or a plateau in demand more so than a threat to carmakers, who will be focused on profits. A 10% margin in a 16.5-million-sales-pace environment would be A-OK. That said, 2018 will entail month after month of industry observers prognosticating doom. The horse-race quality of reporting in the monthly sales numbers will support this, as the market almost has to post year-over-year declines — sales running above 17 million for years on end isn't sustainable. The last significant sales decline came in 2009 with the financial crisis, and it was horrific: the US sales market plummeted to 10 million annually and General Motors and Chrysler went bankrupt. But prior to the Great Recession, cyclical downturn had typically just knocked off about a million vehicles annually in total sales. Automakers plan for that type of slide. They don't anticipate Armageddon. Regrettably, market-watchers have grown accustomed to pondering auto sales in light of the "last war." So for the car companies, 2018 is liable to bring 12 months of grinding negative sentiment juxtaposed with historically still-robust sales.
Speaking of doomsaying, tightening credit will further darken the mood.  Automakers and banks have in good times and bad times dealt with fluctuating credit conditions. The Great Recession was a glaring exception, but for decades, a US market that moved up and moved down and interest rates that rose and fell were all managed quite capably. Since the financial crisis, easy credit has certainly boosted US auto sales. A slow uptick in rates, driven by Federal Reserve policy, could pull the punch bowl a bit farther away, and it would trim the lower reaches of the lending spectrum, helpfully constraining subprime loans. Slightly lower loan volumes will be yet another justification for doomsayers to argue that the market is tanking. Automakers, however, will be able to handle the situation by continuing to push up transaction prices. They'll sell fewer cars, but they'll charge more for the ones they sell, and they'll sell them to more credit-worthy borrowers.
Electric cars will hit a plateau.  Globally, electric-vehicle sales make up only about 1% of sales. In the US, three vehicles are driving the growth of the market, such as it is: the Chevy Bolt, the Nissan Leaf, and the Tesla Model 3 — all mass-market cars. Leaf sales should remain predictable: this is a car that's been around for years and recently got a big update. I'd expect it to post something like 10,000-15,000 in unit sales for 2018. The Bolt has been an unexpected success story; at a stretch, it could hit 50,000 in total 2018 sales, assuming GM wants to make that many and demand continues to grow. The Tesla Model 3 is the wildcard. Demand on paper is crazy high, over 400,000 pre-orders. But Tesla's ability to deliver the vehicle is woeful. Full production likely won't arrive until mid-2018. That means less than 200,000 Model 3 deliveries in 2018. So the meat of the US EV market will add up to only about 250,000 — roughly a 1.5% share on the mass-market level (Tesla's share of the luxury market, at roughly 100,000, could be added to that). Analysts will point to a wildcard factor of more affordable EVs on the road inspiring more sales, a virtuous cycle. I'll believe it when I see it. The overall market dynamics are pointing more toward a consolidation than growth, as flat 2018 sales will constrain EV expansion. Growth, growth, growth for EVs in a juiced sales environment isn't a good thing; it would be better if we saw a few years of sales at a solid level, indicating consistent demand.
See the rest of the story at Business Insider
| 
0 comments:
Post a Comment