LAS VEGAS -- Despite a weak fourth quarter in 2000 and flagging consumer confidence, automobile sales nonetheless should hit 16 million units in 2001, an industry consulting firm predicts.
|J.D. Power's evaluation of the major franchises|
Plus: Strong new vehicle profits; small incentives
Minus: Waiting too long for new product; unsettled dealers
Outlook: '01 sales down 200,000 units
Plus: Lucrative trucks
Minus: Questionable car strategy
Outlook: Share drops below 15 percent by '04
Plus: Nailed product timing in '90s
Minus: Product appeal dipping; cycles too long; incentives too high
Outlook: Some decline, but capturing Plymouth sales
Plus: Product proliferation into all segments
Minus: Weak with youth; customer handling
Outlook: Growing share
Plus: Entering new segments; strong with youth
Minus: Customer handling; Nissan a threat
Outlook: Growing to 6.5% share in '03
Plus: Strong product on horizon
Minus: Customer handling; no image
Outlook: Altima is crucial
Plus: Foothold gained in U.S.; entering new segments
Minus: Tougher competition, still competing against used cars
Outlook: More growth
Plus: Downturn resistant; near-luxury red hot
Minus: A glut of $35,000 SUVs, some unclear images
Outlook: Beware stretching the brand (Jaguar, Mercedes)
"The economy is definitely slowing, but it's not a recession or retrenchment," said Steve Goodall, president of J.D. Power.
"If people don't buy cars, it's because they don't want to, not because they can't," he said. "The slump in the stock market has frozen some people. The automobile is a postponable purchase."
While growth in disposable income will shrink from 3 percent to 1.5 percent, it is nonetheless growth, Goodall noted.
Combine that with proactive interest rate cuts from the Federal Reserve Bank, and baby boomers in their peak earning years, and car sales should not slip too far from their best-ever year in 2000. Unemployment is expected to rise to 4.5 percent from the current level of 4 percent, which should not cause too much damage to consumer spending, Goodall said.
The only reason sales would dip to the 15 million range or lower would be an external cause, such as a war or fuel shortage.
Among the other trends:
Sport-utility sales will pass mid-sized sedans as the largest segment in 2003.
Fourth-quarter 2000 sales were at a seasonally adjusted rate of 16.3 million units, but customer cash rose by $200 a unit over the third quarter.
Thanks to investment by foreign automakers, North American production capacity will rise by 1 million units by the end of 2002, then by another 1 million units by the end of 2004. However, while North American factories ran at 90 percent capacity in 2000, that will drop to 84 percent in 2001, 82 percent in 2002 and 80 percent in 2004.
In looking at individual automakers, Goodall said, "GM is the most vulnerable in terms of capacity utilization and profit. Ford traditionally has the best capacity utilization but still will drop to about 85 percent."
Added Goodall: "Toyota and Honda will be in the 90s after a couple years above 100 percent capacity."