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| Auto sales could hit 14 million in 2012. |
Rising employment, better credit availability, new products and urgency to replace aging vehicles will drive U.S. auto sales higher in 2012, forecasters say.
Sales predictions from 11 independent analysts ranged from 13 million light vehicles (Wells Fargo Securities) to 14 million (Morgan Stanley). The average outlook of 13.6 million would be up 6 or 7 percent from this year's sales, which are likely to finish between 12.7 and 12.8 million units.
That 1 million unit spread in forecasts is narrower than the 1.5 million spread among 2011 forecasts by seven analysts a year ago.
All the analysts expect as much disruptive and unsettling economic news in 2012 as there was this year. But they say American auto buyers don't scare as easily as they did three years ago, when the financial crisis hit.
Crisis-jaded consumers have become less likely to change car-buying behavior based on economic news -- good or bad, says Alec Gutierrez, senior market analyst for Kelley Blue Book.
Gutierrez noticed the change in summer during the congressional debt-ceiling standoff that triggered a cut in the U.S. credit rating.
"The Dow fell 1,500 points -- and car sales stayed smooth and consistent," he said. "The American consumer has seen so much gone wrong. If they have to buy a car, they will."
Economic ups and downs won't greatly alter 2012 auto sales, said Jeff Schuster, top forecaster of the Americas for LMC Automotive, formerly a unit of J.D. Power and Associates. He forecasts sales of 13.8 million.
A sharp European recession would trim 2012 U.S. light-vehicle sales by no more than 300,000, Schuster said, while a U.S. economic surge might add 200,000 units. More important are pent-up demand, larger inventory and growing credit availability.
"So 2012 depends on those positive trends and the will of consumers to replace vehicles," he said.
Jesse Toprak, vice president of TrueCar.com, said: "Consumers are changing their attitude. Many are comfortable buying a car even though there is no clarity on the economy."
Even relative pessimists say U.S. consumers are harder to scare.
"Consumers are feeling insulated from bad news and secure in their own jobs, so pent-up demand has been driving sales," said Mike Jackson, head of North American auto forecasting for IHS Automotive, who sees 2012 sales at 13.3 million. But Jackson worries that if conditions worsen, particularly if Europe's debt crisis affects credit availability in America, "then consumers will once again postpone purchases."
Most forecasters minimize the odds that troubles in Europe will hurt U.S. auto sales. Polk's Germany-based analysts, for example, compare the debt-crisis debate there to the August U.S. debt-ceiling squabble, said Anthony Pratt, Polk's director of research, Americas.
"There will be lots more noise yet, but in the end it'll get done," Pratt said.
Paul Taylor, chief economist for the National Automobile Dealers Association, says that if European sales falter, U.S. shoppers could benefit.
"German automakers will target the U.S. market to sop up excess capacity," Taylor said. For the same reason, he said, Asian automakers would boost shipments to North America, probably triggering higher incentives and sales.
The increase in sales will be mirrored by a rise in North American production. In fact, four forecasters project the same North American light-vehicle production next year: 13.8 million, up from about 13.0 million this year. That's about the same rise as U.S. sales.
The four prognosticators are IHS Automotive, LMC Automotive, NADA, and Polk.
Most forecasters see sales momentum accelerating in the second half of 2012.
Adam Jonas, top global auto analyst for Morgan Stanley and the most optimistic forecaster at 14 million, expects the seasonally adjusted annual sales rate -- which has been slightly above 13 million since September -- to fall back into the high-12 millions in the first quarter and then start to build.
"We expect a slow start" in 2012 once a flurry of Japanese catch-up buyers eases and because of the end of the accelerated-depreciation (business tax rule that has boosted truck sales) on Jan. 1," Jonas said. "Then the SAAR will improve to the 14 million level by May or June and exit the year in the high 14s."
Forecasters said the recovery of auto sales, from a low of 10.4 million in 2009, likely would continue the slow pace into 2012. The economic fundamentals most closely tied to auto sales -- personal income, unemployment rate and housing starts -- are still weak.
But other factors are helping sales, especially the need to replace America's aging vehicle fleet. The average age of vehicles on the road has risen to 10.7 years, up from 8 or 9 years during most of the past decade, said Tom Kontos, executive vice president of customer strategies and analytics for auction house ADESA.
"Americans have gone without for a very long time," he said. "'I need a car' is the biggest reason for optimism."
Morgan Stanley's Jonas cited higher leasing rates, new model launches and better credit availability.
It's no longer difficult to finance new-car buyers at Egglefield Ford in Elizabethtown, N.Y., said owner Dennis Egglefield.
"A buyer with a 620 credit score can get a loan in the 4 percent range," he said. "Lenders are actually trying to do some business."
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(Source: Automotive News, 12/26/11)
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