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AUTOS: Sales Year Ending On High Note
Analysts predict decent results for December leading toward a possible rebound in 2011.
Bengt Halvorson  | http://thecarconnection.com  |  Posted December 28, 2010   Detroit, MI
New Chevrolet Volts, covered in snow, are loaded onto trucks for delivery. (Photo: Chevrolet)
While the U.S. auto-market outlook can hardly be called bullish, sales this past month are pointing to some growth and further steps toward a rebound in 2011.

But that rebound still looks quite far away. AutoPacific is anticipating 12.4 million next year, and J.D. Power predicts that U.S. sales will reach 12.8 million next year and potentially a 15-million rate by 2012. Edmunds is anticipating a sales rate of 11.5 million vehicles for 2010 and predicting 12.9 million vehicles sold in 2012.

For full-year 2010, J.D. Power is anticipating 11.6 million vehicles sold, and AutoPacific anticipates 11.4 million sales, the same figure that it predicted for 2010 a year ago.

One positive indicator is that even as retail sales are perking up, automakers have reduced new-car incentives levels compared with earlier in the economic slowdown. That's potentially related to the easier availability of credit and financing options the past several months, but also due to the introduction of a range of desirable new mass-market vehicles including the new 2011 Chevrolet Cruze, 2011 Hyundai Sonata and 2011 Kia Optima.

Another piece of good news is the growth in retail sales as opposed to fleet sales. According to Edmunds, sales earlier this year had been supported by growth in fleet sales, as both rental-car companies and corporations moved to replace vehicles. But at the end of the year, retail sales are showing signs of a serious recovery, with the retail sector up from 710,000 last month to an expected 912,000 this month, according to Edmunds.

Looking as far as five years into the future, AutoPacific does not see the U.S. industry returning to the 17-million unit volumes of not so many years ago. Rising prices due to both new vehicle technologies and upcoming federal fuel economy rules will limit market expansion, the researchers said.

"Even with economic recovery, various economic indicators such as consumer confidence, home values and perhaps most tellingly, unemployment, remain at worrying levels," said Ed Kim, director of Industry Analysis at AutoPacific.

AutoPacific emphasizes that the U.S. market will continue to further splinter and segment into smaller niche models and nameplates, meaning that there might be 320 nameplates or more in the market by 2016, when volume is predicted at the 15.7 million rate.

"Thus, each nameplate will be fighting for a smaller piece of the pie, making it tougher for each of those nameplates to be profitable," AutoPacific said in its sales forecast.

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