Auto dealers are hoping to be busy in the coming weeks, as the traditional spring buying season gets underway over Memorial Day weekend.
The economic uncertainties that have rocked the stock markets may be translating into a slowdown in the U.S. new car market, but things may pick up in the coming days, reports J.D. Power and Associates, as the upcoming Memorial Day holiday normally ushers in the traditional start of the spring buying season.
But a separate report, by consulting firm A.T. Kearney, suggests automakers might be patient for the moment, predicting a huge recovery for the sluggish American auto market in 2011.
Using real-time data from dealers across the country, the California-based research firm says May got off to a “wavering start” on the retail side of the market. The good news is that sales are likely to come in about 11% ahead of the dismal May 2009. But volumes will nonetheless be down from April 2010.
The industry is expected to sell 874,000 cars, trucks and crossovers this month. On a seasonally-adjusted annual sales rate, or SAAR, that works out to 9.2 million vehicles. But that’s down from 9.6 million in April. The industry might have to point the collective finger at itself for the slowdown.
“Compared with April, incentives this month are flat at $2,800, which is contributing to the slower sales pace,” said Jeff Schuster, Power’s executive director of global forecasting. “However, with the unofficial start to summer approaching, consumers are more inclined to consider purchasing a new vehicle, and it’s likely that Memorial Day sales incentives will generate an even stronger close for May.”
While current economic woes have many analysts concerned, Power is upbeat, citing positive growth in both employment and first-quarter GDP. So, if anything, it has decided to bump up its forecast for the full year, albeit slightly, to 9.7 million on the retail side, and 11.8 million overall.
Light vehicle production, meanwhile, is now looking to come in at 11.2 million vehicles, a solid 32% for the year — and 60% for the current quarter compared to the second quarter of 2009.
Compared to the depression levels of 2009 – with overall new vehicle sales coming in at just 10.4 million – the current year is looking reasonably good, especially for automakers that have slashed costs and trimmed excess capacity. But compared to the 17 million annual peaks hit during the last decade, the market is still deeply depressed.
Nonetheless, A.T. Kearney sees better times ahead – and soon. The consultancy’s number for 2010 isn’t far off of J.D. Power’s, at 11.7 million, but it says that the right mix of good economic developments could nudge that as high as 12.3 million.
The real bright spot on the forecasting chart comes in 2011, according to Kearney, which predicts the market will build momentum and could come in at a solid 14.4 million. And by 2012? Look for sales to push back up towards 16.6 million, nearly pre-crash levels.
There’s no question that a recovery is coming, other analysts agree, though few are quite so optimistic. Most anticipate it will take a bit longer to get back to last decade’s peak – and some question whether that will even happen this decade.
What seems all but certain, however, is that the U.S. will struggle to catch up to China, now the world’s largest passenger car market. American dominance may be a thing of the past.