Toyota may finally start seeing some improved sales in January, according to preliminary data.
“The American auto industry is back,” proclaimed Pres. Barack Obama in his state-of-the-union message Tuesday night. And that appears to include most brands selling in the U.S., including Japanese, Korean, European and Detroit makers, as well, if preliminary indications hold true for January.
While the industry won’t report January sales until this time next week, there are clear signs that the market has maintained the unexpected surge in momentum it saw in the final months of 2011, buoying expectations that the U.S. light vehicle market could approach the 14 million mark this year.
The preliminary estimates are that new vehicle sales have been steady during January, report analysts including Kelly Blue Book, a top provider of information on new and used cars sales. It expects January numbers to run 30% below the December high, however, coming in at about 900,000 units for the month or a 13.2 million Seasonally Adjusted Annualized Rate or SAAR.
Nonetheless, at 900,000 units overall, sales would be up nearly 10% year-over-year, KBB’s analysis said.
Ford Motor Co., Chrysler Group, Hyundai/Kia, Nissan, Honda and Toyota are all expected to post higher sales figures, while General Motors could lose some ground when the monthly tally is complete, according to KBB.
“Our analysts have produced a regression model that explores unemployment, housing, consumer confidence and seasonal patterns to assist with our sales forecast for the year,” said Alec Gutierrez, senior market analyst of automotive insights for Kelley Blue Book. “Given current market conditions and our expectations for 2012, we believe sales will continue to improve at a conservative pace in 2012,” he said.
Gutierrez said sales will continue to improve in 2012 due to heightened demand stemming from the increasing age of vehicles on the road now – the so-called “pent-up demand” factor. Last week, Polk Automotive, the Southfield-based automotive data company, estimated the average age of American cars is now hovering around 10.8 years.
“The underlying consumer demand for new vehicles continues to improve at a steady pace. For the first time in several years, we are starting the year off with a warm and fuzzy feeling of the good-old-days where the industry and the consumers are once again focused on the excitement of the new cars –and not which car company is going to survive, ” said Jesse Toprak, Vice President of Industry Trends and Insights for TrueCar.com.
“The positive momentum from the end of 2011 and a reasonable January 2012 sales rate will likely take industry sales very close to 14 million units this year,” Toprak added.
Automakers are also hoping rising auto show attendance will be a harbinger of better sales over the next 12 months. Attendance at the recently-concluded North American International Auto Show in Detroit rose 5%, to its best level since 2005, during the height of the boom in sport-utility vehicle sales.
In addition, KBB’s Gutierrez said the improved outlook for employment also will help drive sales in 2012. In December 2011, the unemployment rate dropped to 8.5%, as the economy added 200,000 non-farm payroll jobs.
“The more comprehensive measure of unemployment provided by the Bureau of Labor Statistics, known as U6, which includes part-time workers that would prefer to work full time and marginally attached workers, is still at 15.2%,” said Gutierrez. “While this is lower than the 15.6% of November, it is still quite high overall.”
Consumer confidence and housing are projected to remain relatively stable through 2012 and will not influence sales significantly. If current projections hold true, 2012 will be another solid year for manufacturers.
Gutierrez said there are some significant downside risks. “We remain especially concerned about the ongoing European debt crisis and the heightened tensions with Iran as potential events that could derail the current U.S. vehicle sales recovery.”