Experts Lower Expectations Of 2016 Retail Auto Sales, Predict Steady Fleet Sales

J.D. Power expects light vehicle sales to rise one percent in April over last year's. This modest growth has caused the institution, as well as LMC Automotive, to reduce their predictions of total light vehicle sales for this year from 14.5 million units to 14.3 million. But while retail sales are trending down, LMC expects these losses to be recouped through an increase in fleet sales.

Consumers are projected to spend around $37 billion on cars in April, surpassing the record of $35 million which was set last April. The average cost of a transaction was $30,902 through the first two weeks of last month, versus the previous high of $30,716, also set last April.

"Top-line performance of the industry remains robust — retail demand is strong, transaction prices are at record levels and consumers will spend more on new vehicles than in any other April on record, however, the rate of unit growth is unquestionably slowing," said John Humphrey, Senior Vice President of Global Automotive Practice for J.D. Power.

He also added that, "the slowing rate of growth, shift in consumer demand away from cars and toward SUVs and elevated fleet volumes pose significant challenges to manufacturers as they compete in the marketplace."

With regard to fleet sales, J.D. Power and LMC say they are expected to hit 328,000 in April, which is a 4.7 percent increase from 301,684 this time last year.

"We fully expect 2016 auto sales to be another record year in the United States, but there is also no question that we will see a slower rate of growth than in the past few years of recovery," said Jeff Schuster, Senior Vice President of Forecasting for LMC.

NAFA Fleet Management Association
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