Auto forecast softer, yet optimism remains

Published: August 17, 2012 6:00 am ET

This is no time to panic.

It was sobering when an analyst at the Management Briefing Seminars in Traverse City, Mich., softened his forecast of U.S. auto sales for this year and 2013 — a contrast to the happy-days-are-here-again exuberance in some corners of the industry during the first seven months of the year.

The auto industry has been one of the country’s few economic bright spots. Dealerships are selling cars. Automakers and suppliers are buying steel and other raw materials and parts, and they have been hiring.

But a softened forecast shouldn’t come as a shock. Industry sales in July amounted to a seasonally adjusted annualized selling rate of 14.1 million new light vehicles, much better than a year earlier but off slightly from the June rate of 14.3 million.

Most analysts still think that 14 million to 14.4 million is the likely range for sales this year.

Even so, consumer confidence slipped in July, according to the Thomson Reuters/University of Michigan survey of consumer attitudes. The unemployment rate remains above 8 percent, and tucked in the most recent employment report from the Bureau of Labor Statistics, along with the good news that private-sector jobs are being created, were household data showing 195,000 fewer people with jobs in July than in June.

Over the lingering U.S. economic sluggishness sits a cloud of global economic uncertainty caused in part by massive debt crises in Europe and questions about the sustainability of economic growth in China.

But things will get back on track and probably sooner rather than later.

Cited as positive factors by analysts last week:

* Economic growth is projected to reach 3 percent next year, up from 2 percent this year.

* Housing prices appear to have hit bottom.

* U.S. household debt is under 11 percent of income, down from more than 14 percent in late 2007, according to Federal Reserve Board data.

* There is still pent-up demand to replace old cars.

One forecaster, Ford Motor Co. chief economist Ellen Hughes-Cromwick, said an improvement in housing starts could begin driving sales gains as soon as next year and could push volume to near 17 million units by the end of the decade.

Clearly, for car sales to get back to pre-recession levels, the recovery must grow in segments other than the auto industry. When real jobs are created in sufficient numbers, more Americans will buy cars.

Ultimately, the market must pick up. In the meantime, wise companies will continue to invest in people and technology.

This column was originally published in the Aug. 13 edition of Automotive News, a sister publication to Plastics News.


Comments

Auto forecast softer, yet optimism remains

Published: August 17, 2012 6:00 am ET

Post Your Comments


Back to story

Market Reports

Thermoformed Packaging 2014 Market Review & Outlook North America

This in-depth report provides analysis and discussions of economic and political conditions, market trends, legislative/regulatory activity impacting supply and demand, business opportunities and threats, materials pricing, manufacturing technology, as well as strategies being implemented by thermoformed packaging companies. In addition, there are reviews of 25 leading thermoformers in the packaging segment, assessing their growth initiatives and performance metrics over 10 years.

Learn more

Automotive Market Review and Outlook 2014 The Americas

This 75-page report features in-depth analysis of the automotive industry for the Americas. It includes discussions of market trends, legislative/regulatory activity impacting production and threats as well as design strategies being implemented by the major automakers. Detailed charts and data tables outline North American automotive production over the last five years.

Learn more

Plastics Building & Construction Market Review and Outlook 2014 with MS Excel chart data

This report provides in-depth analysis of the plastic building and construction market for North America, including discussions of trends, opportunities, threats and the latest developments in construction trends that impact plastics processors.

Learn more

Upcoming Plastics News Events

May 6, 2014 - May 8, 2014Plastics in Medical Devices 2014

May 12, 2014 - May 12, 2014Plastics News Brazil Pharma Summit

September 10, 2014 - September 12, 2014Plastics Caps & Closures 2014

February 3, 2015 - February 7, 2015Plastics News Executive Forum 2015

More Events