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January 21, 2013
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+ )6010 See Good "40 &+ S8: By Ted Craig
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DETROIT – Optimism reigns among auto analysts for the first time in many years. Speakers at this year’s Society of Automotive Analysts outlook conference all expect new-car sales to top 15 million for the first time since the recession in 2008. Ellen Hughes-Cromwick, chief economist for Ford Motor Co., said she was excited about auto sales and the entire economy. “We’re a great bellwether for the health of our economy,” Hughes-Cromwick said. Higher auto sales reflect a healthier business climate as the number of fleet sales continues rising. They rose to 3 million in 2012 from a low of 2 million in 2009. Hughes-Cromwick said that shows the ability of business to obtain financing.
Consumers are also finding it easier to finance their car purchases, said Bob Schulz, managing director for Standard & Poor’s. Schulz expects 15.3 million new-car sales in 2012, due in part to the availability of credit. Schulz said the health of auto credit is reflected in the performance of its assetbacked securities. There were 138 auto ABS upgrades in 2012 and no downgrades. Subprime auto ABS grew to $17.5 billion during that time. Schulz, however, said there’s little sign of a bubble in that market. “We don’t see that as having gotten out of control,” he said. It is instead a measure of how well auto ABS held up during the downturn when compared with other securities, especially mortgages. Consumers will need more money to buy new cars in 2013, as incentives should remain low this year, said Jeff Schuster, executive director of LMC Automotive. Schuster predicts 15.1 million new-car sales this year. Many of those will be smaller vehicles. “The overall trend is downsizing,” he said. Schuster also expects continued growth in hybrid sales. However, he said the two
Photo by Ted Craig BRIGHT OUTLOOK: Ellen Hughes-Cromwick, Ford Motor Co.’s chief economist, offers her prediction of global auto growth this year. Hughes-Cromwick sees a strong year for the U.S. market.
strongest performing categories this year should be premium vehicles and pickup trucks. Pickups are being boosted by a continued recovery in housing. Itay Michaeli, vice president of Citi Investment Research and Analysis, said these vehicles remain popular with consumers, as well. Michaeli points to strong prices for used pickups as proof of consumer demand. He said pickups would suffer the same fate as SUV prices if there wasn’t inter-
est beyond businesses. Michaeli said a resurgence in product releases that starts with the new Chevrolet Silverado means pick-up trucks are poised to outpace the market for the next year. The overall market should see 15 million sales this year, Michaeli said. He gave the lowest estimate and the least positive take on those sales. Even at 15 million, he said, that is less than 7 percent of all licensed drivers. Michaeli said those sales remain “recessionary.”
He did say, though, that the potential for even higher sales exists, as the age of scrapped vehicles is moving toward what he called a “sweet spot” for a higher replacement rate. The analysts did warn of a few potential speed bumps. The one most cited was the continuing budget battles in Washington, D.C., and the effect that may have on consumer confidence. Schulz also raised the issue of an unexpected supply chain issue, such as the 2011 crisis in Japan.
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