ACME — Automakers can expect the good times to keep rolling, and one optimistic analyst told an industry conference in Acme that Americans could come close to buying 17 million cars a year by mid-decade, a peak not seen since 2001.
Itay Michaeli, an analyst with Citi Investment Research, predicted the U.S. market will reach between 16 million and 17 million by 2016. The industry’s best year was 2000, when Americans bought 17.3 million, and 17.1 million in 2001.
Michaeli dismissed the notion that the recovery is fueled by pent-up demand — people desperate to replace worn-out wheels. Sales went up last year even though the U.S. fleet aged.
The Center for Automotive Research, sponsor of this week’s conference at Grand Traverse Resort, has a more conservative forecast: U.S. sales of only 15.4 million this year; 15.7 million next year and growing to 15.9 million for 2015 and 2016, said C.A.R. forecaster Sean McAlinden, chief economist for the Ann Arbor research center.
R.L. Polk data released Tuesday shows the average car or truck on the road is a record 11.4 years old, based on a review of more than 247 million registrations earlier this year.
There are reasons for caution, however. Baby boomers are dominating the market. Job creation is modest at best, especially for young people who are less able to buy cars and less interested in owning them.
“No matter how you look at it, this has been a subpar recovery,” said Mustafa Mohatarem, General Motors’ chief economist. “Companies are just not hiring.”
At GM, “we planned for the recovery and put capacity in place,” Mohatarem said of pickup demand. The plan has not deviated from the start of the year as GM prepared to launch its new family of full-size pickups that are now on sale.
Consumers in the 55-to-64 segment bought 23% of U.S. vehicles in 2011, up from 18% in 2007. At the same time, those between 35 and 44 accounted for 22% of vehicle purchases in 2011, down from 29% in 2007.
Those baby boomers were 15 times more likely to buy new vehicles than 18- to 24-year-olds in 2011, the study found.
Some conference speakers challenged the notion that young people don’t want to buy cars.
The problem is they just cannot afford them yet.
From 2001 to 2010, millennials — those born after 1980 — have seen a 44.2% decline in their net worth, their income has fallen 6% and student loan balances grew 91%, said Anthony Pratt, director of forecasting for R.L. Polk. In terms of their personal lives, 22% are delaying having children, 20% are delaying marriage and 24% of college graduates are back living with their parents or other family members.
But those under 30 are getting driver’s licenses at a lower rate. In addition to not being able to afford new cars, many young consumers are discouraged by the high cost of owning a vehicle.
A study released Tuesday by University of Michigan researchers surveyed about 600 young adults ages 18-39 about why they do not have a driver’s license. The No. 1 reason, cited by 37%, is being too busy; 32% who cited cost to buy and operate a vehicle. A big factor is that 66% were not employed. Another top reason: 31% said they can easily get a ride from someone else.
Disturbing for the auto industry is that almost 21% said they would never seek a driver’s license, but most were older. Among 18- to 19-year-olds, only 7% said they would not get their license.
Only 69% of those surveyed plan to become legal drivers in the next five years.
While the young are not buying cars now, when they get older their economics will improve and GM’s Mohatarem said he fully expects them to be buyers.
Source: freep.com
