Car Sales Are Rising, But Is The Market Really On The Mend?
How high can the car market go? That’s the question a lot of industry observers have started to ask after looking over November’s automotive sales figures.
The month brought significant relief to an industry struggling to climb out of one of the worst downturns it has suffered since the Great Depression. Overall, sales volumes surged 17 percent in November. Other than industry giant Toyota, which is still suffering from its ongoing safety recall problems, most major carmakers saw double-digit gains, reported msnbc.com.
Ford, for example, said its November sales were driven by truck sales that rose 34 percent, while sales of the Fusion jumped 28 percent. Ford said it has already set a full-year sales record for the midsize sedan.
It’s a very different scenario from the beginning of 2010 when car manufacturers seemingly couldn’t give their products away. Last year saw U.S. motorists purchase a grand total of just 8.6 million new cars, trucks and crossover vehicles — that’s barely half the record sales levels the industry set early in the last decade. The current year didn’t get off to a much better start, so for all of 2010 the new car market will still just nudge past the 11 million mark, according to industry research firm J.D. Power and Associates.
Still, the industry sales freeze looks set to thaw in October and November. It’s an odd time for sales to pick up, but warming demand has seen the annualized sales rate nudge 12 million for the last two months. That’s still down 30 percent from the industry’s peak, but a big improvement nonetheless.
Now, the guessing game begins. Will industry sales suddenly return to their former vigor or continue to creep along with just marginal gains? Will the industry eventually match the peaks of the last cycle or has the trend line unexpectedly shifted direction downward, meaning a much smaller recovery than hoped for?
Mike Robinet, a senior analyst with IHS Global Insight is upbeat.
He’s not forecasting a big sales recovery, but he expects sales to grow modestly to 12.8 million in 2011. After that, it’s off to the races. His firm’s annual sales figure jumps to 14.8 million in 2012, and it keeps going, all the way up to 17.2 million by 2016. That number would come within a hairsbreadth of the 17.4 million sales rung up in 2000.
J.D. Power, meanwhile, is forecasting a similar, 12.8 million number for 2011 and a bigger jump — to 15.1 million — the following year. The research firm has not yet made public a projection for 2016.
Such optimistic forecasts depend, of course, on a number of assumptions, as well as identifiable trends. In the latter category is the emergence of the Gen-X and Millennial motorist as a driving force in the new car market. Add in immigration and IHS estimates there will be 25 million new drivers in the U.S. over the next decade, although obviously not all will be shopping for a new vehicle.
Robinet also points to what he calls “the engineering of demand.” Governments are mandating new safety, emissions and mileage standards, while the industry is adding plenty of other features, like the Ford “MyTouch” infotainment system, which could attract existing owners to trade in or upgrade.
But new government mandates and upgraded content in vehicles could also backfire because these changes are likely to raise vehicle prices, other analysts caution — this could drive car buyers to move downmarket or switch from the new to the used car market.
Of course, there are plenty of other reasons to question whether the market will climb to — or at least near — new highs.
While the economy certainly looks better than it did in the months following the onset of the financial crisis, the latest data on the employment market show that the after-effects of the Great Recession remain with us.
More Industry

Pennsylvania Dealership Under New Retailers
The sale of the Chrysler Dodge Jeep Ram store puts a family auto group on a leaner path as first-time dealers take the helm.
Read More →
Battery Storage Takes Priority Over EVs
U.S. automakers are prioritizing battery energy stationary storage over electric-vehicle production as the consumer demand for EVs lags the rest of the world.
Read More →
Auto Dealers Feel Better But Not Great
A second-quarter Cox Automotive poll of franchised retailers and independents found better views of the current market after a good spring but anticipation of third-quarter storminess.
Read More →
New-Vehicle Sales Picture Relative
A May forecast is complicated by last spring’s trade tariff effects on auto retail. Despite continued hard realities, many consumers took advantage of ways to bite the bullet.
Read More →
Auto Group Acquires Third Nissan Rooftop
Iowa-based Coleman Automotive Group recently acquired its seventh dealership, McGrath Nissan, which it renamed Nissan of Elgin.
Read More →
April Less Affordable
Based on prices, reduced incentives and slower household income growth, consumers found it more challenging to buy new last month, Cox Automotive reported.
Read More →
Building an Extraordinary F&I Agency
Work to determine your specialized talent, because that fact will determine everything about your agency’s future.
Read More →
Recipe for Compliance
The secret to both amazing barbecue and compliance is the same: understanding the basics and committing to a process.
Read More →
EVs Getting More Attractive
A growing percentage of U.S. consumers are open to switching and fewer are adverse to the idea, according to a recently completed survey. That’s despite the end of a tax break.
Read More →
EV Sales Drop in April Following Surge
North American electric-vehicle sales were down 28% year-over-year, a sharp contrast from global EV sales growth of 6%.
Read More →