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Auto sales hit plateau, a very high plateau

May 29, 2017

New car sales have reached a plateau, according to Michelle Krebs of Autotrader. 

Krebs says May's sales could be flat or just slightly higher compared to last year.  That follows several months of sales being down slightly.

She says one reason is the cost of everything, including a new car, is going up, but incomes aren't.  The average price for a new car is now $30,000. 

"The price of shelter, of health care, of education have gone up even more," says Krebs, "and yet household income has stagnated."

Krebs says another factor eating into new car sales is the glut of newer model used cars coming off lease.

But Krebs says 2017 is still going to be a robust year for automakers in the U.S.

"We aren't in a crisis mode," says Krebs.  "Despite the fact that we're predicting sales down a little bit from last year's record, we're still going to be at the 17 million mark, and that will still be the 5th best year in history if we hit the numbers we think we will."

However, while SUV sales remain very strong, small car sales have plummeted. Krebs says there have already been some shift reductions at factories that make small cars, and that trend of job losses could accelerate in the coming years.

Krebs says Americans feel they no longer have to make a choice between fuel economy and utility, since SUVs have become much more fuel efficient, and gas prices remain low.