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U.S. Sales Expected To Accelerate In 2012

Will New Found Optimism Find An Outlet In Design?

“U.S. automakers can do something they haven’t been able to do in the better part of a ½ century. Take some risk on the product side”

After years of doom and gloom, bankruptcies, and plant closures, American manufacturers emerged from the Detroit Auto Show with a spring in their step.

Morgan Stanley analyst Adam Jonas captures the mood with a quote from former GM titan Bob Lutz’s memoirs in which the great man describes how the former Detroit Big Three (now modestly referred to as the D3) became skilled at stamping out examples of “perfect mediocrity”.

Jonas says there is no excuse for this lack of vision any more.

“There’s little doubt the Detroit Big Three’s product was significantly impaired by an inability to take risks and this in turn helped build cultures of incrementalism,” said Jonas.

The industry isn’t bound anymore by the commodity mentality of industries like airlines or steel beam making.

“The structural changes in the wake of the financial crisis enable the U.S. automakers to do something they haven’t been able to do in the better part of a half a century. Take some risk on the product side,” Jonas said.

As well as many new and smaller new cars being shown at the Detroit Show, credit conditions for consumers are improving and this is creating a perfect storm because the U.S. domestic car fleet is old, with the average age 11 years.

Cranking up forecasts
Analysts are cranking up their forecasts, and Jonas weighs in with a bullish prediction that 2012 U.S. light vehicle sales will jump nine per cent to 14 million, possibly a little more. Goldman Sachs reckons sales will rise five per cent to 13.5 million. Price Waterhouse Coopers tops that with 13.6 million. LMC Automotive sees 13.8 million.

Keith Crane, editor in chief of Automotive News put it this way.

“There has been a buzz in the air about the United States. Everyone seems optimistic about the automotive economy during the next 12 months. It’s a pleasure to be surrounded by positive thinking,” Crane said.

It will be sometime before anyone can say that about Europe’s prospects.


Neil Winton – January 25, 2012

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