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You’ve probably been noticing that fuel prices have been creeping up lately, as usually jittery investors see signs that the economic outlook is improving.
In the automotive sector there’s also some positive news; JD Power and Associates, along with the LMC Authority, are predicting that new vehicle sales in the US will reach 13.4 million this month, up from 12.7 million in December last year, this despite a reduction in sales incentives to move metal during 2011. Current estimates from both groups predict even stronger demand in 2012, with current projections set at some 13.8 million units.
“For the third straight time, light-vehicle sales are posting strong selling rates at the close of the year,” remarked Jeff Schuster, LMC’s senior vice president. ”Next year, the automotive industry will look to build upon the strong finish to 2011, but the real test in 2012 will be weathering a summer selling slowdown and posting a full year of a progressive recovery,” he said.
[Source: Automotive News]
According to a report from Ward’s Auto, an inherent shortage of small and medium sized cars (mostly due to supply issues relating to Japanese automakers), have resulted in an overall drop in fuel economy ratings when it comes to passenger cars and light trucks.
Those vehicles sold between July and September this year, averaged 22.2 miles per gallon, down from 25.2 mpg the previous quarter. The findings marked the second consecutive drop in the Ward’s Auto Fuel Economy Index rating.
Although small car inventory was down significantly, especially at Toyota (64 percent) and Honda (67 percent), Japanese automakers weren’t the only ones suffering from reduced stocks during the third quarter. In fact both Hyundai and even Ford had to deal with shortages of 74 and 41 percent respectively.
In total, passenger car sales stood at 229,250 units in total for the third quarter,down by 38.5 percent versus a year ago. This also meant that market share of passenger cars stood at some 46.3 percent of total light vehicle sales, the smallest percentage since 2005.
In terms of manufacturer market share in the passenger car segment, the leader during the third quarter was Volkswagen, which boasted a slice of some 25.6 percent according to Wards, while Toyota finished runner up with 25.1 percent. Nissan and Kia rounded out the top four.
General Motors led the domestic pack, with a 20.7 percent share, followed closely by Ford (20.1). Yet despite the second straight fall in overall fuel economy ratings, on balance, the 2011 model year was an improvement on 2010, the average fuel economy rating of 22.4 miles per gallon up by 1 percent versus the year prior.
[Source: Ward's Auto]
This year hasn’t been the kindest to Japanese automakers Honda and Toyota. The devastation wrought by March’s earthquake and Tsunami in Japan, resulted in severe disruptions to their supply chains, causing dealer inventories to run low and other automakers to gain ground in sales.
However, after a dismal July, there are signs that both Honda and Toyota are gaining momentum; supply from Japan has improved, while factories in North America are running in overdrive in an effort to boost vehicle inventory to more ‘normal’ levels.
Even though rivals, including Detroit’s big three, have gained ground this year as a result of problems facing the Japanese duo, most seem to view Honda and Toyota’s improving fortunes quite favorably.
Don Johnson, General Motors’ US sales head, believes that more Hondas and Toyotas on dealer lots will help stimulate overall growth in new car sales, bringing back buyers who’ve been sitting on the fence. ”A lot of brand-loyal customers have chosen to sit on the sidelines until selection and price improve,” he says. “They will be coming back into the market.”
That said, it is likely to be some time before inventory levels reach pre-March totals. Randy Pflughaupt, group vice president of sales administration for Toyota, believes it will be 2012 before the automaker achieves year-over-year sales increases; Honda meanwhile, is currently running at around 95 percent of normal production in Japan, with full inventory achieved on all US product lines bar the Civic which traditionally is one of it’s most popular models.
According to a number industry analysts, it’s inventory that defines the ‘winners’ and ‘losers’ in the marketplace and right now, as it stands, Domestic brands are leading the way, Chrysler boasting a 72 day supply on its vehicles, allowing it to post a 20 percent gain in sales during July, as Honda and Toyota combined, slipped 6.9 percent. Ford, with a 54 day supply has seen sales jump by 13 percent for the bread and butter brand and 40 percent for Lincoln in the same period. GM, with a 73 day supply has reported gains of some 8 percent.
“Whoever has the cars, outsells everybody,” declared Ralph Martinez, a Chrysler dealer principal from Wilsonville, Oregon. “People are out there buying,” he said, but “they’re going to places that have a good selection.”
[Source: Automotive News]
It seems that the news in Detroit today, at least as far as the Big Three automakers are concerned, is more positive than we’ve seen in some time. Earlier this week, General Motors announced a hiring spree, saying it planned to add more than 4,000 new jobs. Furthermore, some analysts are predicting that within the next two years, GM’s workforce could swell from 77,000 to some 85,000 employees, almost matching pre-recession numbers.
At Ford, hiring plans are also underway, the Blue Oval looking to fill up to 7000 new positions in the next two years, though the hiring process isn’t scheduled to begin until later this year.
At Fiat controlled Chrysler, things are also looking more optimistic. The automaker is looking increasingly profitable and has announced that it wants to hire an additional 1,000 employees, on top of the 4,300 it recruited last year.
However, analysts are saying that these announcements are far more than just PR spin, they’re actually looking to be realistic targets. “It’s a goal they can meet,” said Rebecca Lindland from IHS Automotive. Of course, new jobs greatly depend on the Big Three meeting projected sales targets, though there are encouraging signs on that front too. US light vehicle sales are projected to grow to around 13 million units this year and with Japanese automakers struggling due to ongoing supply problems, Domestic manufacturers have an opportunity to increase market share.
GM plans to ramp up Volt production in the next few years, from the current 10,000 cars per annum to 25,000 – CEO Dan Akerson says he’d ultimately like to see more than 100,000 Volts roll off the assembly line, though recognizes that any increases also hinge on battery production. As it stands, the company has about 1,350 laid-off workers who will get priority on any new related job postings and according to a statement from the UAW, those workers should be back on the job by September. The UAW is also pressuring the General to reopen assembly plants in Janesville, Wisconsin and Spring Hill, Tennessee, as well as prevent the Shreveport, Lousiana plant (which currently makes the Chevy Colorado/GMC Canyon) from closing.
[Source: Detroit Free Press]