Key economic factors point towards another strong year for the U.S. retail auto industry in 2001, according to a forecast from the National Automobile Dealers Association.

NADA chief economist Paul Taylor is predicting total sales of 16.3 million cars and light trucks in 2001, down from 17.4 million last year, but still the third best year in history.

Taylor said the cooling of last year's red-hot sales is being driven by fears of slower growth, higher petrol prices, concern inflation will re-appear and colder than normal winter weather. He bases his optimistic forecast on recent moves by the federal reserve to cut interest rates, continued high household wealth and an anticipated return to more seasonable weather patterns.

"While we've been brought back to earth since the fourth quarter of 2000, the fundamental conditions are in place for a return to strong sales for much of 2001," said Taylor. "In historical terms, sales of more than 16 million vehicles would be a remarkable accomplishment."

An area of significant sales strength in 2000 was cross-over utility vehicles (CUVs), jumping 78 percent in 2000.

"CUVs match the needs of a growing number of consumers by combining car, truck and minivan attributes," said Taylor. "They are stylish, practical and fun vehicles."

Many of the CUVs resemble mini-SUVs, such as the Ford Escape, Subaru Forester and Toyota RAV4. Others strike a more unique styling note, such as the Chrysler PT Cruiser and the Pontiac Aztek.

Taylor made his comments during his annual economic review and forecast at NADA's 84th annual convention in Las Vegas.

Other observations by Taylor included:

  • Sales of small cars were up 18 percent in 2000, and should stay at a fairly high level in 2001, fueled primarily by new products from Japanese and Korean manufacturers.
  • Luxury car sales were strong in much of 2000, largely due to gains in stock market-driven household wealth. Sales for these vehicles climbed 5.5 percent from the previous year.
  • SUV sales also gained ground, increasing by 2.2 percent.
  • Mid-size sedan sales dropped by 6.6 percent.
  • Small car sales jumped by 18 percent in 2000, with the most modestly priced cars increasing by 54 percent.