DETROIT – Those who track automotive sales for a living are not quite singing “Happy days are here again,” but the mood definitely is upbeat at the Society of Automotive Analysts 23rd Annual Automotive Outlook Conference.
“We are in a growth industry. In fact, it looks like double-digit growth in 2011. That should bring a smile to your face,” Ellen Hughes-Cromwick, chief economist-Motor Co., tells attendees of the conference here on the eve of the North American International Auto Show press preview days.
William A. Strauss, senior economist and economic advisor-Federal Reserve Bank of Chicago, also is optimistic but says several trends, both positive and negative, will limit vehicle sales to relatively modest growth during the next several years.
On the positive side, consumers are saving more of their income or using it to “deleverage” themselves by paying off debt to get their finances in better shape, he says. But on the negative side of the ledger, unemployment promises to stay as high as 7% by 2013, and the housing market also will be slow to recover.
Even so, inflation remains in check, and rising fuel prices should not hurt the economy’s gradual improvement, Strauss says.
Hughes-Cromwick sees the tax-cut plan being implemented by Congress boosting commercial-vehicle sales by as many as 50,000 units this year and pent-up demand for light vehicles increasing overall U.S. sales to 12.5 million units or even 13.5 million.
A total of 11.6 million vehicles were sold in 2010, an 11.1% increase over 2009 but still the second-worst year since 1982.
According to Ward’s data, U.S. auto makers delivered 1,140,165 light vehicles in December, a 15.2% improvement in the daily sales rate over year-ago (28 days vs. 27 in 2009).
The results lifted the seasonally adjusted annual rate to a 16-month high of 12.5 million units, making December the third month in a row to top 12 million.
Hughes-Cromwick also sees economic and demographic trends that promise to ignite strong sales globally in coming years.
“The global economy is reaching a dynamic phase,” she says, adding there will be 700 million more potential drivers in the world by 2020, (increasing from 5 billion to 5.7 billion), and incomes in 50 emerging markets are starting to reach the point where consumers can afford to buy their first vehicle.
There were 73 million vehicle sales globally last year, including medium- and heavy-trucks, she says.
“We are on cusp of seeing consistent growth in global sales,” Hughes-Cromwick adds, predicting global sales of 75 million to 85 million units for 2011.
China vehicle sales will continue to grow, albeit at a slightly slower rate, but the outlook for Japan and especially Europe is dim. says Calum MacRae, automotive specialist at PwC’s Autofacts. Production overcapacity and European countries implementing new austerity budgets to curb their debt will hurt new vehicle sales.
Analysts also cite a number of other factors that promise to impact future vehicle sales.
Rebecca Lindland, director-Automotive Research, IHS Global Insight, says the growing number of young consumers reaching driving age will begin to boost vehicle sales, although a little later than originally expected because of the recession.
Jeff Schuster, executive director-Global Forecasting, J.D. Power & Associates says the large number of Baby Boomers staying in the workplace well beyond regular retirement age also will increase new-vehicle sales.
However, Schuster warns the cost of meeting new corporate average fuel economy standards, estimated at $4,000 to $7,000 per vehicle, will change the vehicle mix and put an increasing number of vehicles out reach for mainstream consumers.