U.S. vehicle sales beat expectations, cruise to a ‘very good year’

The experts didn’t see it coming.

New-car sales were supposed to drop in 2018, according to most analysts, with early predictions around 16.6 to 16.8 million compared to 17.2 million in 2017.

But dealers remained optimistic, based on results of a Cox Automotive survey.

“Although price pressures and costs are working against them, we continue to be encouraged by the fact that dealers are optimistic about market prospects,” said Jonathan Smoke, chief economist of Cox, to Autodealer Today magazine before the year even started.

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So who had a better measure of the market?

It wasn’t until mid-year – when there were growing signs that 2018 vehicle sales actually could beat those early forecasts – that the experts conceded the year might turn out better than expected.

“At a glance, it appears that forecasts may have been slightly underestimated,” reported CBT Automotive Network in June. “Surprisingly positive results from most major automakers have helped keep the retail automotive industry from sounding the alarm in the first half of 2018.”

“But it’s much too early to celebrate,” cautioned CBT. “While 2018 started strong in auto sales, there’s a very strong possibility that sales will erode in the third and fourth quarters.”

Another good month

Then came June results as the fourth month of the first two quarters with a sales increase.

Not long after, Forbes reported that “despite generally good conditions, automakers are in for a rough finish to 2018,” based on an interview with a senior economist from Cox.

But the months of August and October also beat out 2017 results, and November sales brought the year to around 16 million, ahead of 2017, based on data from the automakers themselves and the U.S. Commerce Department’s Bureau of Economic Analysis (BEA).

And that set the stage for December, the strongest sales month every year since 2015.

Four-year win streak

Although December was only the third-best sales month this year – both March and May were higher – the total passed 17.2 million reported by the automakers in 2017 to 17.3 million. That makes 2018 the fourth consecutive year of more than 17 million in vehicle sales.

And, finally, the experts got it right. Well, sort of.

“There is no denying 2018 was a very good year for the U.S. auto industry,” said Charlie Chesbrough, senior economist, in Cox’s December forecast. “Many economic factors pointed to a slowdown in the second half of the year, but sales remained in high gear.”

Market uncertainty?

But in comments to Seeking Alpha, an Edmunds manager found a negative spin for the results.

“Automakers continue to rely heavily on upping fleet sales to mask eroding retail demand, and that’s not a sustainable place to be,” the Edmunds manager said. “A record number of lessees returning to the market should help give dealers a boost in the New Year, but rising interest rates and vehicle costs are going to continue to give car shoppers pause and create uncertainty in the market.”

Forecasts for 2019 now range from 16.5 million to about 17 million, according to a Bloomberg report, Don’t Be Fooled: The U.S. Auto Sales Party Is Coming to an End.

But that’s not very different from 2018, which turned out to be a pretty good year, after all.

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