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News   January 10, 2011   by CARS Magazine

Detroit auto show to open with newfound optimism: Reuters

The most significant arrival at this year's Detroit auto show is something of a throwback to the heady days of the late 1990s: optimism that growth is accelerating in an infamously cyclical industry, according to Reuters.


The most significant arrival at this year’s Detroit auto show is something of a throwback to the heady days of the late 1990s: optimism that growth is accelerating in an infamously cyclical industry, according to Reuters.

Coming just at the start of the new year, the Detroit event is the first of a string of trade shows where automakers clamor to build buzz for vehicles months before they hit showrooms.

The U.S. auto industry snapped a four-year sales decline in 2010, including three consecutive sales months above the 12 million unit annual rate to close the year. Most analysts expect double-digit growth in 2011 and further gains in 2012.

The last time the U.S. auto market saw three consecutive years of substantial sales growth was in the late 1990s when Detroit automakers were still riding high.

James Paulsen, chief investment strategist for Wells Capital Management, believes U.S. sales could reach annualized rates of 15 million to 16 million units by the end of 2011.

Other analysts have offered a more conservative outlook on 2011, given persistently high U.S. unemployment rates and a still uncertain outlook for the housing market.

Jeff Schuster, director of forecasting for J.D. Power and Associates, expects U.S. auto sales to reach 12.8 million vehicles in 2011 and rise to 15 million in 2012.

The 2011 forecast could increase, he added.

“I think coming off the momentum we had in the fourth quarter there’s more likely to be upside risk than a downward revision,” Schuster said at a Society of Automotive Analysts meeting in Detroit on Sunday.

If austerity was the watchword at the Detroit auto show the past three years, then growth and new investment aimed at capitalizing on the still-developing upswing dominate presentations this year.

One sign of the industry’s renewed confidence: vehicle debuts are expected to roughly double at the Detroit auto show this year to as many as 40 all-new vehicles, up from 18 in 2010.

Another major theme: the rollout of new small cars, electric vehicles and hybrids that major automakers have readied to roll out at a time when oil prices — and gasoline prices at the pump — are heading higher.


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