Original Equipment Suppliers Association (OESA), estimates what many are predicting will be US economic growth of 3% next year will sustain the current strong revival in American automotive sales.
The US has bounced back after one of the deepest recessions in living memory, with some predictions ranging between 16m and 17m unit sales, in an echo of more heady previous times.
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“Economic numbers are starting to look sustainable and economic growth – everyone is saying it’s going to be in the 3% range next year,” OESA SVP industry analysis and economics, Dave Andrea, told just-auto in his office in Troy, near Detroit.
“Now we are going to get a second wind for capital expenditures for new expansion and infrastructure, so our employment numbers are being sustained.
“Government policy of quantitative easing to keep interest rates as low as they are has certainly helped. Everybody was concerned about a too rapid increase in interest rates and the resulting drop in the bond market.
“But what we are seeing is because of slower recovery in Europe and hot spots across the Middle East and Eastern Europe the US still becomes a safer haven – that continues to attract capital which helps keep interest rates low and helps support the bond market.”
Despite conceding at some point the auto market “will fall,” the OESA economist said a new injection of supplier caution and preparation of contingency plans should help in the event of any new downturn.
Underpinning the American auto recovery is also the availability of credit that can see vehicle loans of up to 72 months, with some incentives to mark the end of the sales season at 1% or 0%.
But the robustness of the US market this time should be able to cope with future sales falls – even of significant magnitude – and allow manufacturers to achieve a break-even position.
“When we survey our members and ask them – where [does] North American light duty vehicle production need to be for your companies to be at break-even – that is 12.8m units,” said Andrea.
“Of course we will close in on 17.2m – so the market can drop 25% and the industry overall will still be at break-even.”
