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2012 North American International Auto Show

Monday, 9 January, 2012 0:49 AM

Big Three automakers expected to remain profitable throughout 2012, analysts agree

PHOTO BY GLORIA RZUCIDLO / ©AMERICAJR.com

Panelists at the 2012 SAA Automotive Outlook Conference at Cobo Center in Detroit.

 

by Gloria Rzucidlo
gloria1025@yahoo.com

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DETROIT -- The Society of Automotive Analysts (SAA) presented its 24th annual Automotive Outlook Conference in the Michigan Room at Cobo Center in Detroit. SAA President Anthony Pratt delivered the welcome and opening remarks.

"The SAA is celebrating 25 years this year," he said. "We saw the industry grow in 2011, so we have optimism. We are anticipating growth in 2012. The composition of this organization is not all analysts. We have members from manufacturers and suppliers. We refer to this event as the super bowl event. In 2011, its been a good year with 70 new members, with a total of 370 members. We had an event at the L.A. Auto Show so we hope to expand our events to the west coast. We are proud of our 25th year. "

Automotive News Executive Editor Edward Lapham moderated the event for the evening.

Colin Langhan, U.S. Automotive Analyst at UBS, talked about the three key parts of his presentation. First, 2009 was the longest and worst decline in automotive history with a very slow recovery. "Is this a good time to buy or not?" Langhan asked.

He said there is economic uncertainty and we should remain cautious. We have a very strong credit environment, which is a strong positive indicator. The U.S. scrappage trend is rising. For 2012, the production outlook is positive. Expect further weakness in Spain, Italy and U.K. in auto production. Second, Europe is a slight drag. And third, 2012 results are improving for the Big Three.

Brandon Mason, Senior Auto Analyst at PwC Autofacts, forecasted 106 million in light vehicle markets, which is 5.3 percent annual growth rate. We continue to grow since our supportive influences outweigh the risk factors. "Sales in U.S. continue to bump up," Mason says.

He said there were a couple of down quarters in 2011, but the third and fourth quarters rose up. By the end of the year, we should be on solid ground. Inventory was a big story in 2011. Half of the inventory loss was related to the earthquake/tsunami crisis, even though the Japanese inventory rebounded well.

Mustafa Mohatarem, Chief Economist at General Motors LLC, said Europe is going to be a challenge in the new year. The U.S. economy could lead the world. China's economic growth remains strong. While recent developments in the industry point to continued improvement, lessons learned from 2011 remain cautious.

"U.S. vehicle sales can be considered a bright spot in this recovery," Mohatarem explained. "The U.S. auto industry always recovers from recessions. This time will be no different. "Americans want to drive new cars, but as the economy improves, there will be a similar recovery. 2011 was a very humbling year for economists. The global economy faces lots of challenges. The U.S. is clearly outperforming its peers. Overall, we think it will be a good year."

Paul Taylor, Chief Economist at the National Automotive Dealers Association (NADA), said as we look forward to 2012, inventory problems will be sorted out by the second quarter. "We expect the Detroit three to fight for market share as they did in 2011," Taylor said. "Small car sales improved in 2011 and a faster pace for light vehicle sales expected in 2012. Dealership performance improved in a slow growth economy. Total sales improved and net profit improved. "Cars are on the move and gasoline prices are generally favorable for 2012."

Then, there was a question-and-answer period with the panel of experts.

"Safety is our guiding principle, it is what we do," said David Strickland, Administrator of the National Highway Traffic Safety Administration (NHTSA). We have expended a great amount of energy to improve our service. Highway deaths are at the lowest level since 1949. Since 2006, there is a 25 percent reduction in highway fatalities. We are making headway. Anything we can do to get those numbers lowered, it is an effort worth taking. Finding solutions, understanding driver behavior is the lifeblood of what we do. We are on a threshold of driver safety. We have 33,000 annual auto fatalities which is significantly lower than previous years.

The NHTSA's current five-star safety rating system, gives customers an opportunity to compare vehicles. Electronic technologies continue to be a challenge. Teens feel the need to be connected. Under Secretary Ray LaHood's driver distraction plan, we are trying to find ways to improve the technical zone of safety. We continue to refine and improve data in monitoring distracted drivers and crash involvement.

Their other mission is CAFE standards. Gas prices soared and people felt the pain at the pump. Is our fleet going to be prepared for our energy future? We're making conventional cars more efficient and safer.

In 2011, BMW sold more premium vehicles worldwide than any other manufacturer, according to Ludwig Willisch, President and CEO of BMW of North America. He said price is not a key factor in their decision. Premium customers want authenticity, which is a brand that stands on their own. Customers also want sustainability without giving up performance or comfort. Advanced technology is truly important to our premium customers. Our sales and service satisfies the needs of the retail customer. "I know we have many competitors, but BMW always takes the game to a new level."

For more information on the Society of Automotive Analysts, visit www.saaautoleaders.org.

Related Story: Automakers need to add more technology to stay on the minds of millennials, panelists agree

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PHOTO BY GLORIA RZUCIDLO / ©AMERICAJR.com

Ludwig Willisch was the keynote speaker for the evening.

 

PHOTO BY GLORIA RZUCIDLO / ©AMERICAJR.com

He is the President and CEO of BMW-North America.

 

PHOTO BY GLORIA RZUCIDLO / ©AMERICAJR.com

David Strickland is the Administrator of the National Highway Traffic Safety Administration (NHTSA).

 

PHOTO BY GLORIA RZUCIDLO / ©AMERICAJR.com

He said highway deaths are at the lowest level since 1949.

 

PHOTO BY GLORIA RZUCIDLO / ©AMERICAJR.com

Paul Taylor is the Chief Economist of the National Automotive Dealers Association (NADA).

 

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