The consulting firm A.T. Kearney predicts U.S. light-vehicle sales could jump from 11.7 million this year to as many as 15 million in 2011 and 16.8 million in 2012.
Skeptics ask: How?
Pent-up demand and more-available credit, says A.T. Kearney's Daniel Cheng.
Cheng says shoppers have deferred purchases of 19.6 million units since 2007. He expects 9.2 million of those shoppers to come back into showrooms next year.
But that's just 47 percent of the pent-up demand. Typically, 65 percent of that demand turns into sales during a recovery. The percentage will be held down by tight credit.
Loan approval rates for subprime customers dropped from 68 percent before the recession to just 12 percent during the recession. That's starting to ease. Since the fourth quarter of 2009, nonprime-loan approvals have increased 2 percentage points -- and that's big. Cheng estimates that a 1-point increase in loan approval rates means an extra 350,000 sales a year.
So the difference between A.T. Kearney's most-likely and best-case scenarios will be driven largely by lenders.