J.D. Power Projects A Better 2011

by Bertel Schmitt

Published: January 23rd, 2011

Based on stronger than expected early indications, J.D. Power agrees with Edmunds and also predicts a strong January. Based on 11 days of sales, J.D. Power thinks 2011 will be a much better year. Power up-revised its forecast for total light-vehicle sales in 2011 to 13.0 million units (from 12.8 million units).

J.D. Power sees January total light-vehicle sales to come in at 794,500 units, 14 percent higher than January 2010. Fleet sales are projected to account for 20 percent of total sales (160,000 units.)

J.D. Power and Associates U.S. Sales and SAAR Comparisons

January 20111December 2010January 2010New-vehicle retail sales632,100 units

(23% higher than January 2010)947,821 units514,633 unitsTotal vehicle sales794,500 units

(14% higher than January 2010)1,142,032 units697,368 unitsRetail SAAR10.0 million units10.9 million units8.1 million unitsTotal SAAR12.2 million units12.5 million units10.7 million units

1Figures cited for January 2011 are forecasted based on the first 11 selling days of the month.

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Bertel Schmitt

Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

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4 comments

Marcelo de Vasconcellos on Jan 23, 2011

I don't care what the "experts" say....I believe more in you, Bertel. What's your gut feeling? BRW, BEertel, your Prtuguese is perfect.

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- Bertel Schmitt on Jan 23, 2011
  
  It will go up. I lived through so many crises, the end of the world was predicted in each, and the world just kept going. I started working on Volkswagen a few months before the first oil shock- talk about perfect timing! After every crisis, there always is a rebound. However, I don't think we'll see 17 million cars in the U.S. anytime soon. The great car buying frenzy of 2000 ff was blamed on easy credit, and to some extent, that was true. The main, and largely ignored, driver was that there was a population peak in the main car buying age. That peak is now getting older, and we have to wait 20 years before the children of that peak start buying cars. These factors are huge drivers of the market. The car market is quite simple: You need people with money. If there are fewer people in the main car buying age, fewer cars will be sold. I think 15 million is as high as we will ever go for quite some time. Using these demographic studies, I had predicted the big car boom of 2000 in a book I ghostwrote in 1998 for a Volkswagen executive. I also predicted that it would be rough going after that peak is looking at the golden years.
  
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- Marcelo de Vasconcellos on Jan 23, 2011
  
  Yeah, I believe in your explanation. In fact, it's one of the reasons being given as to why the ball is spending sometime in the Brazilian court nowadays. We are now in that perfect demographic period that gives us a great window of opportunity. We have more people working (or in working age) than either retired or children (and in need of support). So the bulk of the people are now productive. This state will go on for the next 15 years or so. Afterwhich, people like me will start retiring and inflating the numbers of unproductive people. This well be somewhat offset by the fact that there will be less children, but it harks badly as i (hopefully) get to 80, when retired people will be almost equal to people still working. Looks like my child will be living in a place simiar to Europe today (in 30 to 40 years).
  
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Steven Lang on Jan 23, 2011

The sales results for North America will likely be around the mid-12's at best. It will improve a bit. But there are severe structural issues within our economy that will start to have a greater impact this year.

Due to the lack of Chinese supplied 'stimulus money' for 2011, government employment is going to substantially plummet in most areas of this country. Very few states are in the black at this moment. Out of the states that are in the deep red, virtually all of the worst ones are from high population states. You will see a far greater share of layoffs and outsourcing in 2011 than in 2010.

City governments and county governments will likely have to cut back to an even greater extent. A lot of them were able to maintain their credit ratings despite a reduction in tax revenue and a hike in pension liabilities. But that will change as well.

More retirees also means more fixed incomes, and unlike other generations, this group has to contend with children who are not doing nearly as well financially. Folks in their mid-60's and up can rely on a secure retirement income source.

Their children and grandkids? The mass of them are struggling. Far more than any time in the past. The unemployment rate in the United States is probably closer to 17% (if it were calculated accurately) and that's not likely to change at all given the issues with public employment. The payroll tax deduct will have a very small impact compared to the layoffs in the public sector.

The world is always full of trouble... and I realize that we are going to more than likely have a better year. But this economic storm we're experiencing isn't only coming from one or two sources like it did in prior recessions.

The government is too big to sustain iteself. Our pension and medical liabilities are untenable. Oil prices are already edging closer to $100.. in February. Competition for commodities is becoming incredibly stiff. The real rate of inflation in this country will more than likely be right around the 10% to 15% level. True oil shortages usually result in nasty spikes and though it may not get a retiree to trade in his Camry for a Fiesta. It will discourage most folks from buying new. 236 million used cars on the road translates into a lot of less costly options.

One more thing. The 12k out the door car is pretty much over at this point. The automakers no longer have to spit out heavily discounted models to sustain their union contracts and excess dealerships. With profits guaranteed for virtually all the major automakers in North America (except maybe Chrysler) you won't see the bargain pricing of recent days gone by. You will see aggressive leasing opportunities... and that will likely be the one source that generates the growth needed. The GM/Americredit merger will also help as well.

Long story short, the bounce will be brief and feline driven.

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