TRAVERSE CITY, MI – The outlook for the U.S. auto industry “has improved dramatically” since the government stepped in with billions of dollars of support, says Rod Lache, managing director of North American Equity Research for Deutsche Bank Securities Inc.
Here Wednesday to address the annual Management Briefing Seminars, Lache warns, however, that uncertainty over oil prices and availability, coupled with global environmental regulation, still hang over the industry.
“The government role will be less prominent (in the U.S.) but more elevated around the world, even though the crisis (in the U.S.) is behind us,” he says. “We still have (carbon-dioxide) levels to consider and our dependence on foreign oil.”
Lache says oil global reserves may have peaked, which is bad news for the U.S., importer of more than half of the oil it consumes. His statistics show that if oil goes from $40 to $120 a barrel, “$300 billion will leave the U.S. each year,” braking domestic growth.
“That’s a concern, front and center,” Lache emphasizes.
Still, his crystal ball indicates slimmed-downCo. may turn a profit by 2011 and Motor Co. could generate an operating profit by late this year.
In fact, Lache says auto makers as well as suppliers might become profitable sooner than expected, “mainly because they’ve taken out capacity” during the downturn.
Reducing the U.S. dealer body from 20,000 in 2008 to a forecast 16,000 by 2011 “also should have a significant impact on the profitability of remaining dealers,” helped in part by firmer pricing, he adds.