Retailers are expressing confidence that 2017 U.S. light-vehicle sales will duplicate 2016's record volumes.
But signs of unhealthy industry habits are rising, warns Thomas King, vice president of J.D. Power's Power Information Network OEM operations, media and marketing.
Consumer incentives are up sharply, factory inventories are building, fleet volumes are creeping up, and used-car prices are softening, King told an audience at the J.D. Power Automotive Summit Thursday.
While the industry is in line for 17.6 million sales in 2017 -- just a bit higher than 17.5 million in 2016, he said -- retail sales actually dipped slightly last year while fleet sales rose.
"We're also seeing unprecedented levels of incentives," he reported. "2017 needs to be a year of strong production and incentive discipline."
He said that average per-vehicle incentives rose $546 in 2016 to a record of $3,957.
That level has crept up over the past few years, even topping the approximately $3,800 incentive level at the time of the 2008 economic crash, when automakers were frantic to move inventory.
King also noted with alarm that manufacturers appear to be overbuilding inventories again -- a practice that took a toll on new-vehicle prices in the previous decade.
He noted that the industry's average days-to-turn rose by six days in 2016, to 66 days. Unsold inventory totaled 3.9 million for the industry in 2016, up from approximately 3.6 million in 2015.
King estimated that the overabundance of previous-year models translated to $1.5 billion in lost revenue opportunities.
"That's a real problem," King said. "The only way to reduce that is through more incentives.
"We're selling '16s when we should be selling '17s."