IHS Industry Outlook: Back to +17 Million Units by 2015
By Charles Krome
With November sales now in the books, it’s becoming clearer and clearer that the industry is back on the upswing, and that was reinforced during a recent American Press Association (APA) event in Detroit. There, the team from IHS—one of the more prestigious of the automotive consulting companies—presented its forecast for 2011 and beyond to key members of the automotive elite (oddly, they let me in, too).
The IHS is predicting the auto market will finish at approximately 11.5 million units this year, an increase of 1.1 million vehicles over 2009, then continue to steadily reclaim sales through 2015. The forecast is for the industry to reach 12.8 million units in 2011 and hit the 17.1-million mark by 2015—which would be roughly equal to the industry’s pre-meltdown peak of 17.3 million units, achieved in 2000.
According to the IHS’ Michael Robinet, one of the speakers at the APA gathering, the rebound will be driven by a number of key factors:
• The gradually improving economy, including a loosening of the credit market.
• Pent-up demand combined with a steady stream of new, more attractive and more technologically advanced products.
• An increase in the population of drivers in the U.S.; per the IHS, the number of people of driving age will grow by 25 million over the next 10 years.
• Relatively high prices for used vehicles, which will make pricing on new cars and trucks appear more attractive.
However, Robinet cautioned that some notable economic headwinds remain to challenge the industry, including persistently high levels of unemployment and continuing struggles in the housing market. The latter is of particular concern, as home equity has traditionally been an important resource for potential vehicle buyers. In addition, consumer confidence in the financial sectors is still quite low and is being exacerbated by Wall Street’s recent bad behavior.
Another important factor, of course, is fuel prices. The IHS forecast assumed oil prices would stay below $93 per barrel for the next few years—it was at $88.41 at noon today, December 3—and that a sudden spike in fuel costs would make for a radical change in the industry outlook.
Now, what do you think the chances of that are?