AutoPacific Forecasts 12.4 Million Sales for 2011

As the automotive industry enters 2011, 2010 is notable for being the start of the road to recovery from the disastrous sales numbers of 2009. 2010 is expected to close out at 11.4 million units - incidentally spot on with the AutoPacific's 2010 prediction one year ago.

Going forward, the industry can look forward to year-on-year recovery through 2016 - at a healthy but mild pace - on average about 6 percent per year. Shorter term, AutoPacific expects 12.4 million sales for 2011 - up 7.7 percent, a million units over 2010 volumes. This is a reflection of a gradually recovering economy, greater access to consumer credit, and compelling new vehicles and technologies becoming available in the 2011 calendar year.

"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. "These are longer term problems that will take time to fix, so economic recovery - and hence auto sales recovery - will occur over several years."

In fact, AutoPacific does not expect that the market will return to 17-million unit volumes like those seen just a few years ago during its five-year forecast horizon. Due to new technologies and upcoming Federal CAFE rules, consumers can expect new vehicles to become significantly more expensive over the next few years, impacting total industry volume potential.

In light of this, automakers will be challenged by the sheer number of nameplates offered to consumers. By 2016, there will be well over 320 nameplates in the marketplace, compared to 198 in 1998, the last time industry volumes were in the neighborhood of the 15.7 million sales expected in 2016. Thus, each nameplate will be fighting for a smaller piece of the pie, making it tougher for each of those nameplates to be profitable - especially when costs associated with technology and CAFE regulations will make vehicles more expensive.

AutoPacific 2010 Q1 Five-Year Sales Forecast (millions)

2011

2012

2013

2014

2015

2016

12.4

13.5

14.4

14.9

15.4

15.7

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