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Automotive has been the steadiest market for metals suppliers for the past several years, but its rate of growth is slowing. Don’t be too concerned, says Bernard Swiecki, senior automotive analyst with the Center for Automotive Research in Ann Arbor, Mich. “It really is a good time to be in the industry.”

Speaking at the Association of Steel Distributors meeting June 22 in Chicago, Swiecki reported that vehicles are selling at a seasonally adjusted annual rate around 17.4 million units—certainly a healthy level, but up only a modest 1 percent this year. To put that plateau in perspective, he noted, 2015 marked six straight years of growth in auto sales, tying the all-time record. Even 1 percent growth in 2016 would set a new mark. In fact, CAR forecasts a new record each year until 2019 or 2020, with annual U.S. light vehicle sales reaching 18.4 million units in 2018. “If this is a down year, we’ll take it,” he said.

Automakers are facing some daunting challenges, however. They have less than a decade to meet federal CAFE standards that call for the nation’s passenger fleet to achieve an average fuel economy of 54.5 miles per gallon. To reach that goal, the industry will need to improve fuel economy and cut emissions by 4-5 percent per year. “That may not seem like a big number, but historically we have improved each year by 2 percent or less, so the pace of innovation must more than double,” he said. “More than that, the industry has already picked the low-hanging fruit. Early gains were easy gains. Each year, the percentage we need is more difficult to achieve.”

Automakers see suppliers of steel and aluminum as important allies in their fight to design vehicles that are lighter and more fuel-efficient. But it’s an uncomfortable alliance for the two metals camps as they continue to compete for a larger piece of the automotive pie. The naturally lightweight aluminum seemed to have the upper hand early on, but predictions of steel’s demise now appear premature. “Aluminum scared the pants off [the steel industry] back when Ford made the F-150 [aluminum-bodied truck] announcement. Universally, the steel industry is now being praised for one heck of a response,” Swiecki said. Major investment in R&D by leading steelmakers has yielded new advanced high-strength steels that have slowed aluminum’s momentum. “We expect aluminum to be used in places where joining is less of a concern, such as deck lids and doors, but we don’t expect the massive migration that some folks were forecasting five years ago.”

Many feel the government fuel economy standards are unrealistic, even unnecessary, but there is no doubt they have had an effect, Swiecki added. “The industry actually now admits that regulation is a driver of innovation. It’s undeniable, with 54.5 mpg staring us in the face.”