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Signs For A Recovering Automotive Market Look Good

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On: Wed, Jan 26, 2011 at 4:37PM | By: Sherry Christiansen

Signs For A Recovering Automotive Market Look Good

Great news for the automotive industry was reported over this past holiday season. It wasn’t just a typical year of spending time with friends and family. Actually, the good news was about all of those presents that were purchased. Now, before you bemoan the commercialization of the season, keep in mind that what happens over the holidays, in terms of consumer's purchases, has quite an impact on the rest of the year. When shelves are emptied manufacturers have to make more stuff which means more factory workers, truckers, and sales folks are going to be kept busy.

The boost in retail sales figures (present buying!) also provides a boost in confidence. When Americans see that other Americans are spending money, they figure “Hey, we should get into the spending act as well.” Based on those figures, the dutiful number crunchers over at J.D. Power and Associates predict that the January auto sales might just outperform the numbers from last year. Very good news, indeed.

“Typically January is a weak month because of the push to end the year on a high note, but the volume and selling rate has been slightly higher than average,” said Jeff Schuster, executive director of global forecasting. “It's a good signal for where the year is going.”

One indication that the U.S. economy might be back on the road to recovery is that uptick of auto sales. J.D. Power even rewrote their original prediction from 10.4 million new cars sold to 10.5 million for the coming year. When you add that to their prediction of total cars to be sold this year then that figure becomes an impressive 13 million. If that happens it will mean a 12% increase from last year. This is one prediction everyone would like to see come true.

The J.D. Power crystal ball didn’t stop there. They’re thinking that new light-vehicle retail sales will power up to 632,110 units. That’s going to be 23% higher than this time last year. Even though auto industry folks know that January is traditionally a slow month for car buying, they still think it’s going to be better than last year.

“Last January's sales were driven by a replenishment of fleets, which were greatly depleted in 2009,” Schuster said. For the fiscal year, 2010, those fleet sales racked up 21% percent of all light-vehicle demand, he said.

When you add up all these figures, J.D. Power says that this could translate into a North American vehicle production rise. How big a rise? Try 7% to 12.6 million vehicles in 2011. Considering where we’ve been headed, this new direction is a good sign all around.


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