The manufacturing sector could face a headwind in 2019 based on a prediction that U.S. sales of cars and light trucks are forecast to slow this year, according to Cox Automotive.
Light-vehicle deliveries totaled more than 17 million each of the past four years. “This is the year we see it going down” below 17 million, said Jonathan Smoke, chief economist for Cox Automotive.
Cox Automotive’s forecast is for 16.8 million vehicles in 2019, slipping to 16.5 million in 2020. Smoke puts an asterisk on the latter figure because “if you go beyond this year, there’s a greater chance of a recession.”
Sales totaled 17.3 million last year, according to Automotive News. That was better than forecasts issued at the start of 2018. The 2018 figure was fattened by increased fleet deliveries, which typically are less profitable that deliveries to individual buyers. Fleet purchases were helped by changes to U.S. tax law that took effect at the start of 2018, which cut business tax rates. That has now worn off, Smoke said.
“We’re no longer having the effects of tax reform,” he said.
Cox Automotive estimates that fleet deliveries increased by more 200,000 vehicles last year. Three automakers, General Motors Co., FCA US and Hyundai Motor Co., accounted for almost 60% of the increase, according to Cox.
Also, the auto industry may see a decline if the Trump administration implements a 25% tariff on imported cars and parts.