Being profitable at lower market volume continues to be a key challenge for automakers and suppliers alike in the US

Being profitable at lower market volume continues to be a key challenge for automakers and suppliers alike in the US

The recovery path for light vehicle demand in the US remains slow and fragile, according to JD Power's director of automotive forecasting.

Speaking on the sidelines of a JD Power forecast seminar that took place in London this week, Jeff Schuster told just-auto that he remains concerned about prospects for the US economy and what that means for the vehicle market.

“After a light vehicle market projected at 11.6m units this year, we are currently forecasting a market of 13.2m units for 2011,” Schuster said.

“But the risks to that 2011 forecast are primarily on the downside and the probability of a sub-13m-unit market next year remains strong given wider developments in the US economy and the likelihood that consumers will remain very cautious. Whether we actually experience the so-called 'double-dip' or not, we're most certainly going to be in a slow-growth demand environment for some time yet.”

Schuster expects the 2012 market to pick up to around 15m units - provided the US economic recovery takes root - with a return to the 'mid-sixteens' not anticipated until 2014 or 2015.

“Yes, there will be pent-up demand building while the vehicle market stays so far below trend,” Schuster says. “But there is still a lot to work through for the household and consumer; stubbornly high unemployment points to structural concerns underlying this economic recovery. When the very high savings rate starts to come down, that will be a sign that consumers are ready to spend a little more again.”

He was, however, cautiously upbeat on prospects for the US 'Big Three'.

“GM and Chrysler have very different cost structures now than they did pre-bankruptcy which is allowing them to be profitable at lower volumes. In addition, they have obviously made management changes and are refocussing attention on product.

“Chrysler Group is doing a lot of refreshes to get through the current environment with the current lineup ahead of the new products that will come over the next 2-4 years. GM is in the process of launching new models and the Volt is going to give it a lot of attention in the marketplace later this year and early next year.

“Ford continues to post strong market share levels and Ford's product lineup is appealing to the American buyer right now.”

But Schuster believes the true test for Ford lies ahead.

“The true test for Ford will be next year and in 2012. Will they be able to maintain the gains that they have achieved while the others were going through the restructuring, but are now starting to get into better shape?”

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