Analysts See North American Auto Production Above 16 Million, U.S. Sales Not Far Behind

Bertel Schmitt
by Bertel Schmitt
analysts see north american auto production above 16 million u s sales not far

The recent rise in U.S. car sales emboldened forecasters to predict that 16 million units will be made in North America this year. Some already raise a specter that was thought to be dead for nearly a decade: Capacity constraints.

According to Automotive News [sub]

“Automakers are expected to build more than 16 million light vehicles in North America this year, the region’s highest output since 2002. Two major forecasters, LMC Automotive and IHS Automotive, predict that production will rise from last year’s 15.5 million units as the U.S. economy continues to improve. “

LMC’s Jeff Schuster said:

“We’re getting close to the point where all factories are hitting full speed. We could hit a wall if this keeps up.”

According to Schuster, automakers are running their plants at close to 90 percent capacity utilization.

Note: These forecasts are for North American Production, not for U.S. sales. The U.S. sales outlooks however are not far behind.

LMC Automotive currently maintains the total U.S. light-vehicle sales outlook for 2013 at 15.4 million units.

U.S. light vehicle sales were the highest in the year 2000, when they exceeded 17 million. Sales hovered above the 16 million mark through 2007, only to crash to below 10 million in 2009. Since then, sales recovered steadily.

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  • Carguy Carguy on Jun 11, 2013

    Let's see what happens when the free money window at the Fed closes.

  • Marcelo de Vasconcellos Marcelo de Vasconcellos on Jun 11, 2013

    What surprises me is not the number per se, but transaction prices. According to almost all reports transaction prices have gone up pretty steeply, so not only do you have the old levels back, but these old levels are much richer. In a contracted market one could've thought prices would go down, not the case this time. BTW, I heard a very good analysis on the radio today. The US is now receiving more dollars as investors are putting money back into the US. AS a result, the Brazilian real, the Australian dollar among others have seen a steep devaluation as the dollars that used to be lying around in these places gets diverted back home. With China slowing down commodity imports, those dependent on their export could be hurt pretty bad soon. I guess you can say the US is back.

    • Hreardon Hreardon on Jun 11, 2013

      Marcelo, That's an interesting analysis. I wouldn't necessarily say that the US is 'receiving' more dollars, but there is a boatload of liquidity out there searching for returns. As a result, investors are buying up anything that will yield them a decent turn. The auto sales boom right now is due to several things hitting at the same time: pent-up demand, capacity constraints (lots of productive capacity that was cut during the financial crisis hasn't yet been restored), easy finance, downsizing, etc. Will the US get back to 17+ million sales anytime soon? I have no idea. There are any number of headwinds that might knock the wind our of our proverbial sales (misspelling intended in an effort to be punny...) - so who knows?

  • Jim brewer Jim brewer on Jun 11, 2013

    This happens a lot Marcelo. When one country (usually the U.S.) leads out of a recession the money flows there and the currency rises. We had a very strong dollar in the mid-to late eigthties coming out of that recession and then again right around the turn of the century when the Euro was trading in the 0.70s to the dollar. When I traveled to your country in 1987, I remember the exchange rate was highly favorable to the currency of the time which was the Cruzado and there were currency controls in place by your government. During the commodity boom of the first ten years of this century, the Real I believe more than doubled against the dollar.

    • Marcelo de Vasconcellos Marcelo de Vasconcellos on Jun 11, 2013

      Very true and a tricky moment for us. Brazil is relaxing taxes on foreign money that is invested here for example, to make the environment more hospitable to foreign investors. Other measures have also been taken and the government though it intervened in the market selling dollars trying to keep the dollar down, is taking mostly orthodox measures to try and counter the situation. Measures which have brought Brazil into the "modern" group of countries have relaxed somewhat. Government spending is up foe example. But so is private investment. The problem with the devaluation right now is that we're in the middle of an inflation outbreak. Inflation is now at the top of the target and some people say it's being under-reported. As you were here in 87, you probably well know that inflation is a Brazilian disease that is always ready to rear its ugly head. Fluctuations are normal of course, but even though of late the real has been very strong against the dollar, the fact is prices went up very much 10 yrs ago (when it took almost 5 rais to buy a dollar) to the levels today where it hovers around 2. This fact has guaranteed great returns for investors. Back when the real started, about 7500 US dollars could get you a no frills very basic car. The same car today cost closer to 11 000. If the dollar continues vluating, pressure will be on to raise prices, though it could (as the US experienced recently) help exports or make them attractive again. Fact is Brazilian businessmen have not been very interested in exporting over the last 8 yrs as returns were much better here. Let's see if we can keep our wits about us as the first half of the year was very worrying though signs are now pointing positive again. As always Moodys and such are not helping having recently downgraded the country. End of rant.

  • Olddavid Olddavid on Jun 11, 2013

    I am baffled that the so-called rating agencies that utterly failed their due diligence in the mortgage crisis have any credibility whatsoever. Is it that there is no alternative, so everyone just holds their nose and plows onward? Especially regarding something as important as a national rating that is reflected by billions in additional interest payments. What alchemy are they relying on these days? What are they doing that a simple computer program could not? On the subject at hand, I'm encouraged by these sales projections. I'm still amazed by our productivity. We're producing this many cars annually with a fraction of the workforce it took previously.