Things have been looking up in the US market for the automotive industry lately.
Sales have been improving. November was strong with most companies showing significant gains and one, Hyundai, blowing past everyone else with a +46% increase over same period year ago. Some marques like Audi are predicting that they will achieve new sales records in 2010 and break the 100,000 unit mark for the first time. It looks like we’ll finish the year at about 11.5MM units, up about a million over 2009. Next year sales are expected to improve to 12.8MM.
The LA Auto Show was up beat; there were a number of new and exciting products shown (my personal favorite was the Audi quattro concept). The sense of the industry moving forward was palpable; it was good to be there. Then of course there’s GM’s successful IPO, where investor interest was so strong that the share price exceeded everyone’s expectations.
Even more important, the industry has made important progress during the worst recession within memory. Given the widely held view in 2008 that we were entering a “new normal” with significantly lower industry sales, manufacturers took steps (some with taxpayer help) to reduce production capacity, which has led to dramatically lower inventories at the dealer level. In turn, lower inventories combined with better product quality have led to lower incentives and higher margins. Some manufacturers (BMW, Fiat) are even attempting to encourage consumers to order cars and wait for delivery as Americans become accustom to lower inventory levels and the idea that the car they want won’t be on the lot.
Sales on the rise, higher margins, lower inventories, Americans ordering cars, what’s not to like? Nothing, all good news, until… (more…)
