After six years of rising U.S. auto sales, we wondered: Is there any demand out there still pent up?
Yes indeed, says Steven Szakaly, chief economist of the National Automobile Dealers Association.
Citing the age of the vehicle fleet and years of high unemployment, Szakaly says "we're probably dealing with another year here of pent-up demand."
He says: "There were, effectively, almost five graduating classes that came into one of the weakest job markets in history that are now going to start to make more money. Their vehicles are getting older, [and] I think they are going to be looking at coming into this market and buying new vehicles."
Encouraging, yes, but Szakaly says that's no reason for carmakers to ladle on production capacity as if it were going out of style.
"You get the feeling the OEMs are planning for a 20-million unit U.S. market or something ... that they've already forgotten how hard it was when they had all this excess capacity in terms of pricing and profitability. It would behoove everyone to look back at what happened rather than opening plants left and right."
Szakaly says, "OEMs are consistently poor planners" of volume.
"Very, very few are capable of doing volume forecasting that's realistic because they get very caught up in their own products," he says.
"Everyone feels very firmly that their model will be No. 1."