Subscribe to Print and Digital for only $109!

Will incentive discipline hold? Watch the mid-sized car segment

DETROIT -- Keep your eyes on the mid-sized car segment.

That was one of the messages from Kelley Blue Book's briefing for reporters today ahead of the Detroit auto show.

Kelley Blue Book predicts new light-vehicle sales in 2014 will rise 5 percent to 16.3 million -- if the industry stays disciplined. That means keeping production in line with demand. Not overproducing. Not trying to inflate sales artificially with incentives.

If incentives get out of hand, sales could jump to 16.8 million, says Kelley Blue Book Senior Analyst Eric Gutierrez. But the gains would come at the expense of industry profits.

Where might discipline break down first?

Gutierrez's presentation compared where the industry stands today with where it was at the end of 2007, the last "normal" year before the recession. Compared with then, vehicle inventories are higher. And they're much higher for nameplates in the high-volume mid-sized car segment.

"I expect to see incentives in the mid-sized car segment," Gutierrez said.

The real question is how large those incentives become. The crunch could come "later this year," he added, if interest rates start to rise and demand starts to soften.

Or if someone decides to buy share, which could come at any time.

You can reach James B. Treece at

ATTENTION COMMENTERS: 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.

Email Newsletters
  • General newsletters
  • (Weekdays)
  • (Mondays)
  • (As needed)
  • Video newscasts
  • (Weekdays)
  • (Weekdays)
  • (Saturdays)
  • Special interest newsletters
  • (Thursdays)
  • (Tuesdays)
  • (Monthly)
  • (Monthly)
  • (Wednesdays)
  • (Bimonthly)
  • Special reports
  • (As needed)
  • (As needed)
  • Communication preferences
  • You can unsubscribe at any time through links in these emails. For more information, see our Privacy Policy.