The economy is in a very sluggish mode and people around the world are cutting back on expenses. However, the automotive industry seems to be fairing along pretty well. So much so that economists at GM and FoMoCo expect U.S. auto sales to increase in 2012 from the estimated 12.5 million to 13.5 million.
“We see growth in 2012 for one reason … vehicles are getting very, very old,” Ford senior economist C. Jenny Lin said at a gathering hosted by the National Association of Manufacturers. “We are still very positive about the U.S. auto industry recovery.”
Automakers are betting that there is pent-up demand for new vehicles since the average vehicle lives for about 10.6 years in the United States. Between 1996 and 2000, the U.S. auto industry sold 96 million vehicles. Those cars are now becoming old and nearing death.
“A lot of people are deciding whether to repair their old vehicle — and the costs are getting higher,” she said. “It’s tradeoff mode.”
GM’s chief economist G. Mustafa Mohatarem is also forecasting a strong 2012 but warns that the comoany’s CEO Dan Akerson expects sales to remain ‘flattish’ since he’s a bit conservative. told Automotive News last week that he expects “flattish” U.S. industry sales next year.
“Dan’s view is that we should be planning very conservatively — that so many things can and have gone wrong this year,” Mohatarem said. “So many things can go wrong around the world that you can’t plan on fundamentals driving this thing.”
– By: Omar Rana
Source: Detroit News