Slow recovery dims optimism for auto sales
LMC analyst cuts 2012 forecast by 200,000 units, cites 'jittery' consumers
TRAVERSE CITY, Mich. -- U.S. auto sales have been an outlier in an economy that remains weighed down by joblessness, a still-sluggish housing market and global uncertainty. But those factors have started to drag on the auto industry, leading executives and analysts to inject a note of caution last week at the Management Briefing Seminars here.
"Since the first quarter, we've seen the industry stall," said Jim Lentz, CEO of Toyota Motor Sales U.S.A. "Consumers are still a little gun-shy about going into debt."
LMC Automotive analyst Jeff Schuster lowered his forecasts by about 200,000 units for 2012 and another 200,000 units for 2013. He now expects 2012 light-vehicle sales of 14.3 million and 2013 sales of 15 million.
"We're looking at a consumer that's getting jittery again," Schuster said. "That is driving a lot of volatility again, and that does play out in the vehicle market as we look at the second half of the year. We don't see things going negative; we just don't see things growing as strongly as we had seen previously."
LMC's 2012 forecast had been the highest of 11 presented at the seminars. The others range from 14 million to 14.4 million, any of which would still make this year the industry's best since 2007. The industry posted a seasonally adjusted annualized selling rate of 14.1 million in July, down from 14.3 million in June.
"We're not seeing anything in the leading indicators that suggests we're about to embark on an acceleration of economic activity," said Ellen Hughes-Cromwick, chief economist at Ford Motor Co.
On the positive side, the analysts said housing prices appear to have hit bottom in much of the country, setting the stage for any growth in that sector to help auto sales. Economic growth is projected to increase to 3 percent in 2013, from an estimated 2 percent this year. Sean McAlinden, the chief economist at the Center for Automotive Research, said 3 percent economic growth traditionally has been the minimum necessary to support strong auto sales during past recoveries.
In addition, dealer inventories are back to normal after short supplies hampered sales for Toyota and Honda in 2011, said Paul Taylor, the chief economist at the National Automobile Dealers Association. NADA's current 2012 sales forecast is at 14 million, but Taylor said he expects to adjust that figure upward after August sales are reported.
"Confidence is, at best, mediocre right now," Taylor said. "Consumers will gradually get more confident in this economy as various parts of it begin functioning better."
Longer range, the analysts generally said they foresee U.S. sales to rise to about 16 million by 2015. But while LMC projects sales to reach 17 million -- matching the levels automakers enjoyed in the early 2000s -- McAlinden and Anthony Pratt of Polk each said they expect sales to level off around 16 million before declining to 15.5 million in 2018.
Lindsay Chappell contributed to this report
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