Read the August issue of Fixed Ops Journal, the parts,
service and collision magazine from Automotive News.

The industry's three favorite words

SAN FRANCISCO -- Three little words spark joy in the hearts of automakers and retailers: Pent-up demand.

Everyone knows it's out there. The question is how to burst that dam.

"We know it's out there," assures Jeff Schuster, executive director of forecasting at J.D. Power. "And we know it's big. We just don't know how big it is."

Schuster reasons that the longer the industry goes without seeing the pent-up demand come back online, the bigger the pool will get.

Back in the early 1980s, high interest rates kept customers away from showrooms in droves. But as rates began to melt, sales soared higher than they had ever been.

Same thing after the recession of the early 1990s. Once the economy began looking stable again, factories had trouble keeping pace through the 1990s with not only the normal volume of sales, but also the bonus volume on top of that of consumers who had delayed their purchases for a year or two -- or three or four.

Pent-up demand always comes through in the end. That's the one certainty of the auto business -- people can only continue ignoring that new-vehicle craving for so long. Eventually, the old car will have to be replaced.

As we saw in the past decade, the U.S. market is now fully capable of selling 15 million or more new autos a year. A year or two at 10 million sales suggests there are millions more of unrealized sales out there just waiting to happen.

But how to crack that egg?

25

Shares

ATTENTION COMMENTERS: Over the last few months, Automotive News has monitored a significant increase in the number of personal attacks and abusive comments on our site. We encourage our readers to voice their opinions and argue their points. We expect disagreement. We do not expect our readers to turn on each other. We will be aggressively deleting all comments that personally attack another poster, or an article author, even if the comment is otherwise a well-argued observation. If we see repeated behavior, we will ban the commenter. Please help us maintain a civil level of discourse.

Newsletters