2018 Outlook: Rapid commercial truck growth, lower sales with better profitability in autos

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Following three years of more than 17 million light cars and trucks sold, 2018 may miss that target, but production will stay near record levels, and industry profits and investments are projected to climb.

February 8, 2018

Following seven years of constant gains, auto sales fell slightly in 2017 (see infographic, pg. 24-25). while declines were concentrated in small, fuel-efficient, inexpensive vehicles, booming sport utility vehicle (SUV), crossover, and truck sales brought in massive profit margins.

In addition, on the heavy truck side of the motor vehicle world, Class 8 trucks are expected to extend fantastic gains from the second half of 2017 into this year. ACT Research Vice President Steve Tam says freight growth is boosting profitability for fleet managers, making it much easier to justify big equipment purchases this year (see sidebar, page 17).

In 2018, expect more crossovers, sport utility vehicles, and trucks such as the Buick Envision pictured.

2018 outlook

Predictions for 2018 are mixed. Experts offer full-year sales estimates ranging from about 16.5 million to about 17.5 million with most centering around 16.7 million – the prediction of the National Automobile Dealers Association (NADA). The underlying factors that have kept sales higher than 17 million for the past three years – a growing economy, easy access to credit, and new features that attract new buyers – remain in place. Experts expect a plateau for the foreseeable future of flat sales at historically high levels.

NADA Chairman Mark Scarpelli says, “Every dealer in America, myself included, would be thrilled with a seasonally adjusted annualized rate of above 16 million. Because it means that, one, the market is stable, and two, that demand is still healthy. And both factors are true in this case. We are looking at a stable market where demand – particularly for light trucks, SUVs, and crossovers – continues to be very healthy.”

General Motors executives predict 2018 sales in the high 16 million range, in line with NADA’s outlook. Company chief economist Mustafa Mohatarem says in addition to increasing strength of the general economy, low unemployment is leading to wage growth, making it easier for individuals to add car payments this year. On top of that, the recently passed tax cuts could boost take-home pay for many.

“Many consumers will see their take-home pay rise because of tax reform. That will keep the broad economy growing, and help keep sales at very healthy levels even as the Fed increases interest rates,” Mohatarem says.

Interest rates, low since the recession, are rising. However, monthly car payments haven’t increased as many buyers are opting for longer-term loans – ratings agency Experian notes a 69-month average loan, an all-time record. If rates climb sharply, monthly payments could rise, even with the longer loan terms, but Mohatarem and others don’t expect dramatic increases.

Freightliner’s 2017 Cascadia Class 8 truck posted strong sales gains in 2017 as freight shipments increased and dealers offered discounts.

Changing mix

Fuel-efficient automakers, companies such as Toyota and Hyundai/Kia have traditionally earned most of their sales from smaller cars. With gas prices low, consumer tastes continue to shift toward crossovers, SUVs, and trucks, so companies are radically altering their lineups. Toyota, for example, has expanded production of its RAV4 SUV and plans new Lexus crossovers for this year.

Lexus General Manager Jeff Bracken says, “In 2018, Lexus dealers will have even more options for customers as we bring 15 all-new and special edition models to the market.”

As Pierre Labat (see sidebar, page 20), vice president of global automotive for Novelis Aluminum, notes, at the Los Angeles Auto Show, the vast majority of new production vehicles were SUVs and crossovers. Companies also showed off several electric vehicles and plug-in hybrids, but those were mostly concept cars that won’t go into production this year.

GM’s U.S. sales chief Kurt McNeil says that the automaker has been planning for the demand shift, adding new crossovers to Buick and Cadillac and refreshing Chevrolet’s large-vehicle lineup.

“We are starting 2018 with very lean inventories for such a strong industry, and we see more room to grow because Chevrolet, Buick, and GMC will have a full year of sales of their all-new crossovers, and we are going to launch the industry’s best full-size pickups,” McNeil says.

Electric growth

Though sales of all-electric vehicles (EVs) and plug-in hybrid electric vehicles (PHEVs) are expected to remain a tiny fraction of the industry in 2018 (1.1% of sales in 2017), increasing availability could lead to big sales increases. In January, Tesla Motors lowered production targets for the Model 3 EV, saying it won’t hit 5,000-vehicles-per-week targets before the end of June. But even with that miss, Tesla’s sales should more than double from the 101,312 models delivered to customers in 2017. In addition, GM’s Chevy Bolt EV hit a milestone in December with more than 3,000 sales.

Nissan plans to launch an updated Leaf EV in 2018, Chrysler Pacifica Hybrid PHEV minivans will have a full year’s availability (the vehicle started shipping in April and had limited availability until the third quarter of 2017), and Toyota’s Prius Prime PHEV will enter its second full sales year with higher availability.

As the Center for Automotive Research’s Brett Smith notes, Ford sells 6.3 F-Series trucks for every EV or PHEV sold, but the growth rate of electrified vehicles is increasing, and many industry observers expect dramatic gains throughout the next several years.

ACT Research


General Motors


National Automobile Dealers Association


Novelis Aluminum

Toyota Motor North America


About the author: Robert Schoenberger is the editor of TMV and can be reached at 216.393.0271 or rschoenberger@gie.net.