Slower growth, but still on the right track
Analysts see 15 million in 2013
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U.S. auto sales may not surpass 16 million units for at least two years, but with most automakers already posting healthy profits and struggling to find production capacity to meet demand, few are in a hurry to get there.
And as sales grow more slowly, competition will intensify.
Light-vehicle sales, which bottomed out at 10.4 million in 2009, rose 11 percent in 2010, 10 percent in 2011 and 13 percent in 2012 -- the biggest one-year jump in decades.
But analysts' forecasts call for this year's increase to be as low as 3 percent. Automakers no longer can post large gains merely by riding the industry upward; they'll have to steal customers away from rivals.
"Now it's time to see how fast your boat is," said Rebecca Lindland, an analyst with IHS Automotive. "We all know it can float. Now, can it beat others?"
Sales totaled 14.5 million in 2012 and are expected to reach at least 15 million in 2013. Last week GM issued a forecast of 15 million to 15.5 million, and Ford said sales would end up somewhere between 15 million and 16 million.
"We're not talking about boom times, when we were selling 17 or 17.5 million units," Mustafa Mohatarem, the chief economist for General Motors, said during a conference call last week.
"What we're seeing is a very steady improvement that is paralleling the improvement in the overall economy. People are much more confident about jobs. Banks and other credit institutions are much more willing to lend."
Last year ended with plenty of momentum; the seasonally adjusted annualized selling rate hit 15.6 million in November and 15.4 million in December.
"I'm really encouraged by seeing 15 million-unit numbers again," Lindland said.
"A lot of people never thought we would get back there. What's impressive is we are still very much in an uncertain environment. There are a lot of issues still to be resolved and a lot of reason for angst, and yet the consumer is holding on."
Gino Polimeni, sales manager at Winner Ford in Cherry Hill, N.J., said economic shakiness hurt his sales last year, but he sees only better times ahead.
"I don't think it's going to go backwards," Polimeni said.
Since 2007, U.S. transaction prices have risen 9.4 percent, climbing to an average of $30,550, from $27,917, according to TrueCar.com. Prices hit a record $31,228 in December, signaling more growth ahead this year.
Part of the increase stems from consumers' willingness to pay for advanced technology and other amenities.
In addition, automakers have managed to attract buyers largely without offering the huge incentives that had become a way of life for some companies.
New union contracts allow the Detroit 3 to match production with demand more easily rather than having to keep plants running and then heavily discount excess inventory.
Incentive spending by the domestic automakers was 14 percent lower in 2012 than in 2007, according to Autodata, and incentives were 6 percent lower across the industry.
Healthy profits
The higher transaction prices show how much healthier the industry has become since 2007, when GM lost $38.7 billion and Ford Motor Co. lost $2.7 billion. Ford's North American margins reached a record 12 percent in the third quarter, and GM could post its second consecutive record annual profit next month.
These results came in spite of lower share. GM's U.S. share fell 1.7 percentage points in 2012, to 17.9 percent, the lowest in 88 years. After cutting four of its eight brands, GM's sales last year were 1.2 million fewer than in 2007.
2007 was the last year the Detroit 3 accounted for more than 50 percent of U.S. sales.
In 2012, GM, Ford and Chrysler Group (excluding Fiat) combined for 44.5 percent of the market, the second lowest in history. Their share was 44.2 percent in 2009 but rebounded to 46.9 percent in 2011 when Japanese automakers lost sales after an earthquake and tsunami caused major plant disruptions.
Only 10 mainstream brands active in the United States sold more cars and trucks in 2012 than in 2007, including Ford, Nissan, Hyundai and Mercedes-Benz.
Volkswagen brand sales have surged 90 percent in five years while Kia's are 83 percent higher.
"The auto sector is likely to continue to be one of the key sectors that lead the U.S. economic recovery," Anthony Pratt, director of forecasting for the Americas at Polk, said in a statement last week.
"However, we don't expect to realize prerecession levels in the 17 million vehicles range for many years."
You can reach Nick Bunkley at nbunkley@crain.com. -- Follow Nick on 
