WardsAuto Forecasts 15.6 Million North America LV Output in 2013

With only two months of production remaining this year, WardsAuto mostly is locked in on forecasted North American light-vehicle output of 15.3 million units for 2012, while the outlook for 2013 is boosted.

Forecasted production for 2013 is raised by 141,000 units to 15.6 million, 1.8% more than in 2012. About 100,000 units of that total are related to Hurricane Sandy, which damaged a large number of new and used vehicles in late October. Total vehicles damaged beyond repair have not been determined, but significant replacement volume is a certainty.

The rest of the increase for 2013 comes from a more optimistic outlook for next year, despite potential pitfalls such as the looming so-called U.S. fiscal cliff, or the recession in Europe that could harm the economy in North America.

WardsAuto expects sales in 2012 to end on a strong note, with indicators such as improving construction and home sales, relatively low fuel prices and demand that has built since the recession-induced trough year of 2009, showing volume will remain on the upswing.

In fact, the likely alternative scenario to the 2013 forecast is that volumes will be higher.

Boding well for stronger volume is that there is a host of new product to be unleashed from now through the end of 2013, following the spate of new vehicles that already have debuted this year. There also is a push to increase exports from North American plants, including those of many Japanese auto makers.

Another factor, though not necessarily a good one, is U.S. inventory. There is some crowding beginning to develop in certain parts of the vehicle mix, including small and midsize cars, and large pickups and SUVs. Market leader General Motors, Chrysler (cars) and Volkswagen are maintaining somewhat high overall inventories.

Some specific models at Toyota and Honda, which typically do a better job than most at keeping inventory in line with demand, are unusually high in days’ supply.

These concerns could be alleviated relatively easily with an exceptionally strong finish to sales at the end of the year, some temporary slowdowns in production or selective retail incentives over the next few weeks. But the pressure to raise market share facing major auto makers could lead to more artificial means on the retail end to create demand.

There also might be hesitancy to slow production because of the negative image, right or wrong, it could create for an auto maker. Manufacturers are basking in the spotlight of their aggressive production schedules, and the first to announce some kind of slowdown – no matter how small – will make headlines.

Much of the production increase comes from added shifts, mainly third crews. Most are warranted, but a few are questionable. Most auto makers will be loath to back off such commitments, even if demand for vehicles produced at some 3-shift plants falls below expectations.

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