North American auto production rose 1 percent in October and “should remain strong” through the next 12 to 18 months thanks to strong truck demand, healthy inventories and a strengthening economy, Robert W. Baird & Co. analyst David Leiker wrote in a note today.
The 1 percent rise in production keeps the industry on track for the 2 percent fourth-quarter production growth Baird had estimated, Leiker said.
“We continue to expect solid production rates over the next 12 months,” he wrote.
Leiker said “in-line” inventory levels and “robust U.S. sales” should drive production growth moving forward. U.S. light-vehicle sales rose 14 percent last month to 1.455 million vehicles. The industry is on pace to set an annual sales record this year.
“With employment, income and confidence seeing solid gains, we believe the market grows low single digits over the next several years,” Leiker said.
Leiker said a Wednesday estimate by Delphi of 3 percent production growth in North America in 2016 “is above investor estimates given concerns over ‘peak’ U.S. demand.”
October production growth was driven by demand for trucks, Baird data show. Truck production grew by 6 percent in October, while car production was down 6 percent.
The rise in truck production was driven in large part by 16 percent growth in pickups as Ford boosted production of its F-series line. Car production declined thanks to small and midsize cars falling 10 percent in total, despite luxury car production growing between 15 and 20 percent.