Car Sales Estimated to Hit 20 Million in 2018: 'Car Wars' Report

Craig Cole
by Craig Cole

Car companies that update their product lineups frequently enjoy more sales, larger market share and profits. Keeping average showroom ages low is critical for a car company’s financial health.

These findings come from Bank of America Merrill Lynch, which just released its latest Car Wars report at an Automotive Press Association luncheon in Detroit. This annual study evaluates automakers’ product pipelines and is a treasure trove of information regarding how various brands are doing today and how well they could perform in the coming years. This installment of the report looks ahead from 2017 to 2020.

Major Findings

Between 2008 and 2009, “We had about a 40 percent drop in auto sales in the United States,” said John Murphy, research analyst MLPF&S. U.S. light vehicle sales fell to around 10 million units, making it one of, if not the worst, downturns in this business’ 100-plus-year history.

However, the situation is completely different today. “The industry is doing much better at this point,” said Murphy, and Bank of America Merrill Lynch projects things will get even better in the coming years. They estimate that some 20 million vehicles will be sold in America in the year 2020, a bold projection.

Murphy explained there are several reasons for this anticipated growth. “Consumer confidence is good enough, not great, but good enough,” he said. Likewise, U.S. employment is up, reaching an all-time high of nearly 150 million, topping the previous record by a claimed two million workers.

Decent consumer confidence and a passable jobs situation are important factors in driving new-vehicle sales, but they’re perhaps not the most significant. “Miles driven are spiking up in a big way,” said Murphy.

“Demand for getting from A to B … is up, and it’s up pretty dramatically,” he added, reaching an all-time high. According to Bank of America Merrill Lynch, this has been growing at an incredible rate since about 2014. They project that nearly 3.2 trillion miles will be driven in 2016 in the U.S. Murphy said, “Demand for miles going through the roof.”

Pushing Product

Another key aspect of the Car Wars report is that it quantifies the introduction of new, all-new or next-generation models, tracking major OEMs to see which ones are delivering the most vehicles. However, merely refreshed products are not included in associated totals.

New-vehicle introductions are picking up at a rapid pace, with 70 and 68 expected to hit the market in the years 2019 and 2020, respectively. Between 2017 and 2020, it will average 58 introductions, which is huge.

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This product push will dramatically impact the average showroom age in the U.S. By 2020, experts at Bank of America Merrill Lynch estimate the average new-vehicle age will be just 1.9 years. “It’s a pretty remarkable thing,” said Murphy, but he cautioned that this is not sustainable. “There may be a little bit of pull-back” in the following years he said, with an average age of roughly 2.5 years being a maintainable figure.

Bigger is Better

It’s no secret, American drivers want crossovers and trucks; larger vehicles are big sellers in the U.S. To keep up with demand, automakers are pushing hard to introduce more pickups and utility vehicles.

“This focus on crossovers and trucks is a great thing for [the] mix and ultimately profitability over the next four years,” said Murphy. In the next four model years, crossovers are projected to account for about 31 percent of the overall market, with trucks following closely behind at 27 percent. They estimate that small, fuel-efficient cars could only manage to capture around 18 percent of the market.

Traditionally, Detroit-based automakers have done well in the crossover and pickup segments and it looks like their success will continue. Murphy said, “The D3 have a lock on the true truck segment.”

Cumulative Replacement Rates

Keeping their showrooms as fresh as possible, all automakers are continuing to push new and totally redesigned products into the market. Between 2017 and 2020 it’s estimated there will be relatively little disparity between major brands, with GM leading the pack and European makes bringing up the rear.

However, in the near-term, between 2017 and 2018, Honda is projected to be first, with the greatest replacement rate. Murphy said new versions of the Odyssey, CR-V and Accord will help push the Japanese automaker to the top.

General Motors

But back to the four-year forecast. Of every automaker, General Motors is expected to beat all comers with new product. “GM is getting more competitive,” said Murphy.

The company’s historical replacement rate is low, at around 14 percent, but over the next four years it’s expected to swell to an industry-leading 22 percent. GM’s mix will likely be heavily skewed to light trucks because of demand.


Just like its cross-town rival, Ford’s historical replacement rate is a low 14 percent. But Murphy said, “They’re No. 2 on product replacement rate,” right behind GM for the next four years, clocking in at an impressive 21 percent. Crossovers and trucks are expected to dominate Ford’s range.


Fiat Chrysler’s typical replacement rate ties its domestic rivals, but it’s expected to improve that figure over the next four years, increasing it to 21 percent. The firm’s average showroom age is high today, but that will dramatically improve by 2020. Trucks and crossovers will lead the charge for FCA in the coming years. But there are a couple potential hang-ups. “Can they fund this very ambitions and logical [plan]?” asked Murphy. “Are they able to find a partner to produce their cars.”


Steady as she goes should be the motto for Toyota. Its historical replacement rate is about 18 percent, though that should grow by about two points over the next four years, a figure that’s right in line with the industry average. Underscoring its conservativism, Murphy said, “Their current market share is pretty much where they’re going to stay.”


On the other hand, Honda’s historical replacement rate is around 20 percent, a figure that’s projected to grow to about 21 percent over the next four years. Its mix will likely be skewed to small and midsize cars, rather than trucks and crossovers. Additionally, its average showroom age is already younger than the industry average, which is good news.


But things aren’t as rosy elsewhere. “At Nissan, the product portfolio is all over the place,” said Murphy. Between 2017 and 2020 the company’s average replacement rate is expected to be about 19 percent, slightly less than the industry average. The company will likely miss out on the profitable truck and utility-vehicle segments because it’s too focused on cars. “Nissan seems to be lost … without a great plan in place,” added Murphy. “There may be some real risk here for Nissan.”

European OEMs

The historical replacement rate for European automakers is low at 15 percent. For the next four years it will remain disappointing, increasing to just 18 percent. Average showroom ages are expected to increase by 2020 because these OEMs are heavily invested in costly luxury models, which aren’t easy – or cheap – to redesign. Murphy said another liability they face is that, “They don’t have as much crossover exposure [as rivals].”

Korean OEMs

Finally, we come to the Koreans, specifically Hyundai and Kia. Their historical replacement rate is terrific at 21 percent, but that’s expected to fall to around 19 percent between 2017 and 2020. Their average showroom age will remain better than the industry average, but their product mixes are skewed too heavily toward cars.

Beware of the Uncertain

It’s important for automakers to keep pushing ahead so their lineups are as fresh as possible. Murphy indicated the next economic downturn could come in the next three to five years. He cautioned that automakers need to be careful today by not investing too many resources in non-essential projects. In short, they should focus on what’s the most profitable, which, for now at least, are the crossover and truck segments.

Bank of America Merrill Lynch’s Car Wars report has been published since 1991 and contains data that reaches back to 1987.

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Craig Cole
Craig Cole

Born and raised in metro Detroit, Craig was steeped in mechanics from childhood. He feels as much at home with a wrench or welding gun in his hand as he does behind the wheel or in front of a camera. Putting his Bachelor's Degree in Journalism to good use, he's always pumping out videos, reviews, and features for When the workday is over, he can be found out driving his fully restored 1936 Ford V8 sedan. Craig has covered the automotive industry full time for more than 10 years and is a member of the Automotive Press Association (APA) and Midwest Automotive Media Association (MAMA).

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  • US US on May 14, 2016

    Fascinating article for a car nerd, but not as interesting as the crossover link going to a page about audio/speaker crossovers rather than SUVs, nice