U.S. Auto Sales on Road to Recovery

The leader of the largest U.S. auto dealership group, AutoNation Inc., predicts U.S. automobile sales will accelerate the last three months of 2011 and rise in each of the next two years.

AutoNation CEO Mike Jackson said last week he expects U.S. sales of cars and light trucks to reach a 13 million vehicle annual rate by the end of the year.

"The auto recovery is going to resume probably in October," Jackson said in an interview with Reuters. "We're on a journey back to 16 million, 17 million. I can't tell you exactly when we're gong to get there, but we are going to get there."

Jackson spoke on the sidelines of a meeting of AutoNation dealers and employees from Colorado in downtown Denver led by the CEO, as well as AutoNation President Mike Maroone that was part business and part rally.

Jackson said it was too early to project U.S. auto sales for 2012. He said he wants to wait to see the trajectory of the recovery near the end of the year.

However, a slide Jackson showed in a presentation to the roughly 200 employees last week projected U.S. auto sales at about 14.2 million vehicles in 2012 and 15.9 million in 2013.

Research firm J.D. Power and Associates expects U.S. auto sales of about 12.6 million vehicles in 2011, about a 9 percent increase over 2010. J.D. Power expects U.S. auto sales to reach 14.1 million in 2012.

Jackson said much of the U.S. auto industry will have recovered by October from the March earthquake and tsunami in Japan that limited inventory for Toyota Motor Corp., Honda Motor Co., and, to a lesser degree, Nissan Motor Co.

Jackson, 62, said he is "convinced" U.S. new auto sales will return to more than 16 million per year in part because consumer auto loans have become available after the 2008-2009 recession quicker than home loans.

"We have reasonably good financing available for our customers; not what we had in 2005, 2006, 2007, but we may never have that again," Jackson said, adding that there is pent-up demand to drive sales.

No price wars
Maroone and Jackson said they do not expect a "price war" among automakers and dealers as they try to appeal to consumers in the fourth quarter.

"The whole business is much more disciplined, rational; much more focused on the long-term," Jackson said.

He pointed to the discipline on incentives by the Detroit automakers during the inventory woes of Toyota and Honda.

"Incentives are going to be better than they have been for the last six months," Jackson said, adding that they would not approach a level that would trigger a price war.

(Source: Automotive News, 09/23/11)