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Throughout The Car Industry

Analysts Project Auto Sales Could Reach 14 Million for 2011

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On: Tue, Dec 14, 2010 at 3:19PM | By: Sherry Christiansen

Analysts Project Auto Sales Could Reach 14 Million for 2011

A number of analysts, who were recently polled, projected a rise of around 10% in U.S. auto sales for next year. That would amount to around 11.5 million cars being sold. However, at least one analyst predicted a sales volume that was much higher. More importantly, there is evidence to back up this rather optimistic perspective.

“Morgan Stanley says consumer creditworthiness is improving so rapidly that lenders are about to loosen credit dramatically—and that will rocket the market to 14 million units in 2011,” as reported on autonews.com.

The statement seems as though it could be a little misleading. It is like music to our ears to hear that Americans seem to be focused on maintaining good credit and are making progress toward repairing damaged credit. However, increasing creditworthiness does not inherently translate to significantly more sales. Loose credit simply means that there will be those who qualify for loans who couldn’t get them in the past, and others who will benefit from decreased interest rates as a result of improving their credit.

According to Ravi Shanker, Morgan Stanley’s lead analyst for North America, “The catalyst is credit availability—a bigger impediment to auto sales than tight inventory or low demand.” Time will tell how the extent of decreased consumer demand will factor into the scenario. The nation is still operating rather conservatively, especially when it comes to spending. It is highly likely that people will continue to choose to squeeze an extra 20,000 to 30,000 miles out of their old vehicles.

George Magliano, senior analyst of IHS Automotive, indicates that job and housing uncertainties will negate some of the increased potential for strong auto sales due to credit availability. He is of the opinion that too many fundamental economic factors are weak for a single improvement (credit worthiness) to make that much of a difference.

Jeremy Anwyl, CEO of Edmunds.com, agrees that job uncertainty, housing issues, and the lack of economic stability in the U.S. and Europe, as well as in emerging markets are topics that seem to be keeping prospective buyers on edge regarding investing in new cars.

Auto sales should increase, but the economy is still sluggish, and lenders are still likely to proceed with caution to avoid loan defaults and costly repossessions. Will next year's combined sales level top, or even approach, 14 million? Optimistically speaking, it is a possibility. Stay tuned to autoshopper.com; the first quarter of 2011 will provide more perspective.



AutoShopperJustin | 7:33PM (Tue, Dec 14, 2010)

Sounds good to me!!

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