(June 28, 2018) SANTA MONICA, Calif. — So far 2018 has been a strong but inconsistent year for the auto industry, and according to a new in-depth report from Edmunds, the market could be nearing a tipping point.

"The strength of the economy is creating a very thick forcefield for automakers now, but once that starts to weaken, there are a lot of market factors bubbling just below the surface that could really start to slow down sales," said Jeremy Acevedo, manager of industry analysis at Edmunds.

"Even though millennials are finally starting to buy new vehicles, the U.S. market is virtually saturated. Add to that record-high vehicle prices, rising interest rates and historically high numbers of people who owe more than their cars are worth, and the stage is set for a market contraction."

The Edmunds Midyear Automotive Market Trends report takes a deep look at the major factors that have influenced the industry so far in 2018, from economic indicators to trade policy to car shopping behavior and more. The report also explores the trends that will shape the industry in the years ahead, such as the transition away from cars in favor of SUVs, the impact of the expiration of tax credits on electric vehicles, the impact of the flood of off-lease vehicles on residual values, and the rise in vehicle subscription offerings.

This new report comes on the heels of Edmunds releasing its forecast for June auto sales, which are expected to be up slightly compared to last year. Edmunds forecasts that 1,519,072 new cars and trucks will be sold in the U.S. in June for an estimated seasonally adjusted annual rate (SAAR) of 17.1 million. This reflects a 4.1 percent decrease in sales from May 2018, but a 3.4 percent increase from June 2017.

"June sales look a bit healthier than they actually are because there was an additional selling day and weekend this year," said Acevedo. "On a daily selling rate basis, June sales were actually lower than last year. This is exactly in line with how the rest of this year has gone: Sales look strong, but there are other factors at play that make this success a bit fragile."