LAS VEGAS - The U.S. auto industry is poised for a sequence of 1 percent sales gains over the next five years, fueled largely by a stable economy and a proliferation of SUVs.
Steve Goodall, CEO of J.D. Power and Associates, said population growth combined with the fact that the baby boom generation is reaching the prime earning years will increase demand for new vehicles.
Posing risks to that growth are the possibilities of higher inflation caused by the growing federal deficit, higher energy costs and global instability.
Still, Goodall said, the role of the vehicle in U.S. households is changing. In the 1970s, there was one car for every household. In the 1990s, it was one vehicle for every driver.
Now it will be one vehicle for every purpose, Goodall said at the J.D. Power and Associates International Automotive Roundtable here.
Consumers also demand fresher vehicles, as well as vehicles that blur segments.
Automakers already are shorting some product cycles. Sometimes it is incrementally, as with the BMW Z4 moving from a six-year cycle to five. Sometimes it is strikingly, as with the 10-year Chevrolet S10 cycle being cut to six years for the Colorado pickup replacement.
While fresher product often means better grosses, it also means a greater level of investment capital and human, as well as more frequent training and a shorter period to recoup the investment.
As for product proliferation, the number of models offered increased from 231 in 1998 to 272 in 2003, Goodall said. By 2008 that will increase to 311 models, he predicted.
From 1998 to 2008, the biggest segment increase will be for SUVs, which will gain 57 new models. Power includes car-based crossover vehicles in that category.
Though SUVs will gain 2.2 million units of volume in that time, it also means that 35 of the 38 brands will offer an SUV, Goodall predicted.
A big question arises: Can the industry and its brands handle all those extra entries? Already, incentives in the major SUV segments are well above the industry average. The average industry incentive per unit is $2,420, according to the Power Information Network. Mid-sized SUVs average $3,332 in incentives, and full-sized SUVs average $3,965.
The only other segment that will gain a major number of units will be the compact car segment, Goodall said, but those gains will be offset by a decline in the number of mid-sized cars.