DETROIT—Sales will keep growing in 2015 on favorable economic conditions and are expected to be around 17 million or more, according to two industry forecasts.
That's the position of analysts at Cox Automotive, particularly its Kelley Blue Book unit, and an analyst at Bank of America Merrill Lynch.
Speaking prior to the North American International Auto Show in Detroit, analysts for Kelley Blue Book forecast 2015 U.S. light-vehicle sales of 16.9 million light vehicles, about 2 percent higher than 2014's 16.5 million.
That would be the smallest annual unit increase during the recovery that started in 2010. U.S. sales rose 6.1 million units between 2009-14.
John Murphy, lead U.S. auto analyst in equity research with Bank of America Merrill Lynch, predicts the auto industry will sell more than 17 million vehicles in 2015 and could reach 20 million in 2018, but he expects a sharp downturn after that.
He made his presentation during the Automotive News World Congress on Jan. 14.
“We expect the cycle to continue for the next two years, reaching a peak in 2018 at 20 million units,” he said. “That's a lot higher than most people are expecting, but we also believe there will be a very significant downturn after that.”
For now, he said, “We're in a good recovery.”
In 2014, U.S. sales grew 6 percent to 16.5 million vehicles. It was the fifth straight year U.S. deliveries grew after hitting a 27-year low of 10.4 million in 2009 during the Great Recession.
Murphy said his new vehicle sales forecast for 2015 is 17.3 million and gave several reasons to support his prediction.
He said dealers' new vehicle stock is normal, and the population of vehicles on the road that are 11 years old and older has increased by almost 28 percent over the last eight years.
“And when you think about obsolescence beginning to occur and technology and fuel economy improvements, those older cars are more likely to get scrapped,” he said.
Murphy said those factors all lead to strong vehicle pricing for new and used vehicles, which will reduce the need for aggressive incentives or price cutting.
He said replacement demand has propelled the industry's recovery so far. But improving consumer confidence and an increase in the number of miles driven, after several years when that measure held steady, are creating more discretionary demand for vehicles.
But Murphy cautioned that the good times won't last forever and that auto makers need to hold the lines on their balance sheets.
He added this is not time to “blow” capital investing in “willy-nilly projects.”