TRAVERSE CITY, MICH. - The U.S. auto industry is in fundamentally good shape, but sales should remain flat or only slightly higher through the remainder of the decade, a leading auto analyst said. ``We're going essentially into a no-growth business,'' said John A. Casesa, managing director of Schroder Wertheim & Co. of New York.
The implications of a flat market with increasingly competitive players means more big changes in the auto industry.
``I think there's going to be a lot more restructuring going forward,'' he said.
Casesa, a former General Motors Corp. product planner, said the April slide in auto sales was probably an interruption in a long, cyclical upturn in sales that began about three years ago. He made his comments Aug. 11 at the University of Michigan Management Briefing Seminars in Traverse City.
Sales increased 20.3 percent in 1991-94, far below the 49.2 percent increase during the last upturn in 1982-85. To Casesa, that suggests more growth ahead in the current cycle.
He also said operating cashflow among the Big Three was improving greatly and could reach a combined annual total of $22 billion by 1997. That compares with a current estimate of slightly more than $8 billion in 1995. The cash flow surge should allow the Big Three to invest in more new products.
``The conditions are going to get a lot tougher,'' Casesa said.
Vehicle sales still are strongly linked to consumer sentiment indicators.
Recent results from the University of Michigan Survey of Consumers, released at the Traverse City conference, show that the recent slump in auto sales is over.
Moreover, sales in 1996 are expected to remain in the same favorable 15 million unit range as in 1994-95, said Richard Curtin, director of the consumer surveys.
The school's Index of Consumer Sentiment averaged 92.3 last year and 93.2 through the first seven months of 1995. That translates into continued growth in auto sales, albeit at a lower rate.
``The data has led me to the conclusion that while the size of potential unmet demand will continue to support modest growth in the decade ahead, the rate of growth in the vehicle stock will remain in the 2 percent range rather than the 4 percent range recorded in decades past,'' Curtin said.