Auto sales in the U.S. are expected to reach $3.6 trillion by 2021, the biggest annual growth in nearly a century, according to research firm Autodata.
That includes more than 200 million vehicles sold in 2018, a more than 20% jump from 2017, the last year for which the firm can report.
“We expect that 2021 will be the year of the auto market,” said Doug Miller, Autodatum’s chief economist.
The surge in sales has been fueled by the Trump administration’s decision to withdraw the U, S., and Canada from the Trans-Pacific Partnership trade deal, which is aimed at lowering tariffs between the United States and 10 other countries.
Those moves, along with the Trump Administration’s attempts to crack down on auto companies that sell to Chinese and Japanese consumers, have made auto sales even more competitive in other parts of the world.
A study from Autodation found that the auto industry accounted for nearly 9% of all U.s. sales in 2021.
That figure will grow to 15% in 2022, when the Trump Trade Adjustment Assistance program kicks in.
Meanwhile, auto manufacturers are spending billions to boost their U. s. presence, spending millions of dollars in new plants, as well as investing billions of dollars to expand their business.
“There’s been a huge push in the last few years by the auto sector to make sure that they’re in the best position possible for 2020,” Miller said.
“That includes investing heavily in their U S. and Canada operations, which they’ve already done very well in.”
That’s what makes auto sales so important, said Dan Davenport, president of the American Automobile Manufacturers Association, a trade group.
“When you look at the value of the vehicle, the value for the business, the business value, the profit, and you add the value to the customer experience, then it’s a big deal,” he said.
Autodated’s Miller says the auto sales numbers are based on three key factors: a better economy than a year ago; the auto business’s ability to grow as a result of the trade deal; and consumer demand for auto-related services.
“For the first time in years, consumers want to buy more cars than they ever have before,” he told Recode.
“And when you have more consumers buying more cars, then you’re going to see higher levels of auto sales.”
Autodats Davenports analysis shows that the number of auto orders in 2021 will rise by 1.4% compared with 2021, and auto sales will rise an average of 6.1%.
“If you’re looking at 2020, that was the peak year for the auto economy,” Davens said.
The auto industry also saw a surge in new sales.
While auto sales are down by more than a quarter in 2021, it is up by about 9% from 2017.
That is partly because auto buyers are opting for larger vehicles, as they see fewer choices when it comes to their vehicles.
“The trend has been to buy smaller cars, and the number is increasing,” Daverts said.
Miller says that as auto sales rise, auto sales in other areas of the economy will follow.
“In the business of retail, retail sales are a very important driver of overall business, as people are increasingly looking to use their credit cards to shop, and as they look to do things like rent a house, they’re also looking to buy,” he added.
“Auto sales are the only way to sustain that trend in the coming years, which we expect will continue.”