U.S. Auto Sales Seen at 18.2 Million Peak in 2017 Before Slowing

  • IHS forecast would mean eight consecutive years of gains
  • Tech costs are expected to boost prices and trim deliveries

U.S. consumers will keep the rally in auto sales going for two more years, pushing deliveries past 18 million vehicles before new fuel-saving technologies boost prices and curb demand, according to research firm IHS Automotive.

The sales will reach 18.2 million cars and light trucks in 2017, well beyond the record 17.4 million set in 2000, said Charles Chesbrough, the firm’s senior principal economist. If all goes according to IHS’s forecast, deliveries will have increased for eight straight years. After that, they’ll start to shrink and settle in around this year’s selling rate of 17.3 million in about 2022, he said in a presentation Wednesday.

Auto sales have been a rare bright spot this year in the U.S. manufacturing industry as fuel prices and interest rates have stayed relatively low. Tougher standards for fuel economy and vehicle emissions during the next decade mean added costs for automakers that are likely to drive up prices for car buyers.

“Automakers will add a lot of content to be in compliance,” said Michael Robinet, an IHS Automotive managing director. “They may even shoot for being over-compliant. That extra cost will put vehicle affordability under pressure.”

The U.S. Environmental Protection Agency’s standard for collective fleet fuel-economy average will rise to 54.5 miles per gallon in 2025 from 35.5 mpg now, according to its website.

Getting there will require more electric cars, hybrid models and lightweight materials that will drive up vehicle costs. Chesbrough said he also expects higher interest rates and slightly slower economic growth to reduce car sales.

Carmakers can still find growth overseas, said Mike Jackson, an IHS analyst. The firm predicts an increase of 19 million autos by 2022, mostly in China, other Asian markets and Europe, where Russia may bounce back, Jackson said.

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