NEW YORK -- U.S. auto sales still have room to grow, some auto industry leaders said this week, casting aside worries that the six-year expansion is about to lose steam.
While some analysts and automakers believe the peak has passed, some top industry executives attending the 2016 J.P. Morgan Auto Conference for automakers, suppliers and Wall Street analysts in New York on Tuesday say not so fast.
“No,” said Lear Corp. CEO Matthew Simoncini, flatly answering the peak question from J.P. Morgan analyst Ryan Brinkman. “No, I don’t think we’re anywhere near the peak SAAR.”
The seasonally adjusted, annualized rate of sales, a broad measure of the industry’s health, peaked at 18.15 million light vehicles during the current cycle in October 2015. The SAAR topped 18 million in September, October and November 2015, but has averaged 17.37 million in the months since.
Some economists believe pent-up demand following the 2008-09 downturn has been exhausted. They also predict an anticipated drop in average prices for used vehicles, spurred by a spike in off-lease vehicles, will undermine the new-vehicle market as some consumers balk at rising transaction prices for new cars and light trucks.
In July, when overall sales rose just 0.5 percent, the SAAR hit a high of 17.86 million for the year, convincing some automakers the expansion still has legs.
General Motors CEO Mary Barra sided with the idea that there is still room for sales to grow.
“There’s pluses and minuses,” Barra told the audience Tuesday in New York. “We feel the list of pluses indicate it’s going to continue,” she said, with U.S. auto sales staying in the “mid-17s,” that is, the mid-17 million range.
U.S. light-vehicle sales in 2015 came in at 17.47 million. Sales in the first seven months of the year stand at 10.16 million -- an increase of 1.1 percent over the same period in 2015.
Barra cited increasing U.S. housing starts and low gasoline prices as positive indicators for continued growth.
Simoncini pointed to job growth and low interest rates, in addition to low gasoline prices and stronger housing starts, as factors supporting new-vehicle purchases.
“We’re just getting back to the level we were since before the downturn,” he said. “The reality is, this is the biggest growth industry in the world.”
Joe Hinrichs, Ford Motor Co.’s president of the Americas, said the automaker expects U.S. sales in 2016 to range between 17.4 million and 17.9 million, including medium- and heavy-duty trucks. That’s down from Ford’s previous forecast of 17.5 million to 18.5 million.
But even Ford’s cautious outlook leaves open the possibility that U.S. sales could set another record in 2016 and top 2015 volume.
U.S. sales reached 17.8 million last year when medium- and heavy-duty trucks are included. The upper range of Hinrichs’ 17.9 million forecast would beat last year’s total by 100,000.
Dana Inc. CEO James Kamsickas remains upbeat regardless of whether the industry passes the 2015 record.
“We think it may be at peak, but we don’t see any significant fallback,” Kamsickas said.
“We’re very much a truck and SUV company,” he added. “We think it’s going to probably hover around right where it is now -- and essentially with trucks and SUVs, you can’t make enough.”
Barclays analyst Brian Johnson, in a note to clients last week after automakers released July sales results, said the SAAR in coming months “should see support given U.S. consumer health and financing availability.”
But Johnson has trimmed his 2016 outlook for the U.S. light-vehicle market by 300,000 vehicles to 17.3 million -- he describes it as “an eroding plateau” -- because of the lower quality of the SAAR in recent months and a pledge by automakers to “maintain pricing discipline,” implying “weaker volumes ahead.”
David Dauch, chairman and CEO of American Axle & Manufacturing Holdings, Inc., said the supplier expects U.S. light-vehicle deliveries to total about 17.5 million this year.
“I’m not expecting sales to fall in the near term,” Dauch said Tuesday at the J.P. Morgan conference. “Even if it was to plateau or be a little lumpy, in regards to what we saw from June to July these past two months here, it’s still at a fantastic pace. I see very positive days in front of us from a schedule standpoint. All the major platforms that we’re supporting right now, the schedules are still very strong.”
