JD Power has cut its 2012 US light vehicle market forecast in the light of growing concerns over the weakness of the US economy.
Jeff Schuster, executive director of global forecasting at JD Power and Associates, told just-auto that there is a high degree of uncertainty over where the US economy will be next year.
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He picks out high unemployment as a major concern. “While unemployment is up around the 9% level consumer confidence will certainly be held back,” he says. “And businesses also feel less confident about investing because of prevailing worries over the weakness of this economic recovery and a general sense of uncertainty over where the economy will track over the next 18 months. In these circumstances decision-makers tend to act with increasing caution,” he adds.
In the current climate of economic uncertainty, JD Power is decreasing its forecast for 2012 to 13.8m units for total light vehicle sales (from 14.1m units in its previous forecast). Although the market forecast has been cut, that’s still 13.8m versus 12.6m estimated for 2011 – growth of almost 10%.
“The risk of a double-dip recession has increased to nearly 40%, driving the reduction in the forecast for 2012,” says Schuster. “While there have been recent positive signs in the economy and we expect another recession will not materialise, the recovery pace for 2012 is taking another hit, although a complete halt in growth is unlikely.”
JD Power also said that indications for new vehicle retail sales in October ‘remain stable above a 10m unit level’. October new vehicle retail sales are projected to come in at 828,300 units, which represents a seasonally adjusted annualised rate (SAAR) of 10.5m units. The year-over-year increase in the selling rate is expected to reach 11% – the second double-digit growth rate in a row, after four months of single-digit growth. Retail transactions are the most accurate measurement of true underlying consumer demand for new vehicles.
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By GlobalData“After a solid September selling rate, there were questions as to whether the strength would continue into October, given continued concerns with the economy,” said John Humphrey, senior vice president of global automotive operations at JD Power. “However, consumers are again returning to dealerships, keeping the sales pace more consistent with the strength seen at the beginning of the year.”
Total light vehicle sales in October are expected to come in at 1,012,200 units, which is 11% higher than in October 2010. Fleet sales are also expected to increase 11% compared with October 2010 and will account for 19 percent of total sales.
North American vehicle production still rising
The recovery to vehicle production in North America is continuing, according to JD Power. It said that North American light vehicle production through the first three quarters of 2011 is up nearly 9% (at 9.7m units) from the same period in 2010. The Japanese OEMs are continuing to recover from the earthquake/tsunami disaster earlier this year; however, their production is down 10% in the year-to-date production comparison. The Detroit 3 OEMs have increased production by 14% year-to-date, while the European manufacturers are seeing a 41% increase, helped by BMW’s expansion in South Carolina.
Vehicle inventory edged up slightly to a 50-day supply at the beginning of October from 49 days at the beginning of September, JD Power said. Car inventory has increased to a 44-day supply, up from 40 days in September. With some cuts in truck production, truck inventory started October at 55 days, down from 57 days in September. Several manufacturers remain well below the industry norm of a 60-day supply. Hyundai/Kia began October with 25 days’ supply (was 21 days in September), Honda with 33 days’ supply (previously 32 days), and BMW at 29 days’ supply (previously 33 days).
JD Power said that the 2011 North American production outlook remains on track for 12.9m units, an increase of nearly 9% from 2010. As inventory replenishment continues, fourth-quarter 2011 production output is expected to reach 3.2m vehicles, which is a 10% improvement from the same quarter in 2010.
