Sixteen million is back — and it's likely to stick around for quite a while.
New U.S. light-vehicle sales are widely expected to surpass 16 million in 2014 for the first time since 2007, the culmination of a long recovery from the disastrous recession. But little else about the auto industry today resembles the last 16 million-unit year, when automakers regularly overproduced and artificially raised demand by throwing blowout sales to get rid of the excess.
"Back in 2006 and 2007 the industry was on illegal drugs — doing steroids," said Jesse Toprak, who closely tracks industry sales as president of Toprak Consulting. "This time, the industry is reaching its goal all naturally — on the merit of the product. It's not being fueled by irresponsible lending or outrageous incentive spending."
The Automotive News Data Center estimates that the U.S. auto industry will post light-vehicle sales of 15.6 million units in 2013, which would be an 8 percent gain over 2012. So to reach 16.0 million, sales will need to rise 3 percent in 2014.
The end of the automotive steroid era means more profits for automakers — especially the slimmed-down Detroit 3, which lost a combined $42.6 billion in 2007 — as well as for dealers.
The disappearance of nearly 4,000 dealerships since 2007 means many of those that made it through the recession are now selling more cars and trucks than ever. An industrywide total of at least 16 million would result in an average sales per U.S. dealership of more than 900 vehicles in 2014, up from about 521 vehicles in 2009 and a prerecession peak of 785 in 2005.
"The guys that survived are going to do well," said Steven Szakaly, chief economist for the National Automobile Dealers Association. "We mourned the losses, but we also have to look at the situation as it is now. It's going to be a good year."