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Automotive industry expected to grow in 2014, analysts say
From left to right: Jessica Caldwell of Edmunds.com, William Strauss of the Federal Reserve Bank of Chicago, Brian Johnson of Barclays and moderator J. Ferron of Automotive News.
DETROIT -- The Society of Automotive Analysts (SAA) presented its 26th Annual Automotive Outlook Conference at Cobo Center. Michelle Krebs, SAA Board President, welcomed everyone and says membership is at the highest level ever. "This will be another great year for the industry," says Krebs.
Joe White, Global Auto Editor, Detroit Bureau Chief, Wall Street Journal, talked about his book he co-wrote with Paul Ingrassia, called The Fall and Rise of the American Automobile Industry. "In the early 1990's, we had to make fundamental changes in order to survive. Right now we are at a crucial point in the industry. We didn't recognize the problems between the car companies and the United Auto Workers. We did not see the importance of trucks in the industry. Finally, in 1992-93-94, while working on this book, no one expected China would be so big," says White.
Paul Ingrassia, Managing Editor, Reuters News, says he lives and works in London and is trying to learn the language. "In reviewing the book we wrote 20 years ago, we did not predict the near death experiences of GM and Chrysler. We only focused on the positives," he said. "A lot has changed since the death and resurrection. Two-thirds or three-quarters of the global profits are from trucks and SUV's. As far as technology, we are in constant search for new powertrains. Other technology is the connected-car and the driverless car. Fuel economy pressure will probably ease and new energy will arrive."
J. Ferron, Director of Judging, Automotive News Pace Awards and SAA Board Member, added that 20 years ago, manufacturing was the key. "The government is affecting everything that is going on now."
William Strauss, Senior Economist, Federal Reserve Bank of Chicago, says that the U.S. economy appears to be the strongest economy in the world. "The Great Recession ended in 2009 and has expanded by 2 percent compared to a year earlier. Most of the gain in the third quarter came from an increase in inventories. Real final sales remain restrained. For the positive, home values are rising and the forecast calls for a gradual recovery in housing. The stock market has improved even though it has bounced around with volatility. The next year or two will feel better, but not incredibly better. The unemployment forecast will edge lower in the future."
According to blue chip, the forecast says inflation will rise 1.9 percent in 2014 and 2.1 percent in 2015. The industrial sector has been growing at a pace of about 5 percent. Motor vehicles are leading the way. Industrial production is forecasted to rise in 2014 and 2015. In general, we are looking at an economy that's good but not spectacular.
Jessica Caldwell, Senior Director, Industry Analysis, Edmunds.com, says there has been a lot of transformation since 2009. 2013 finished with 15.6 million units in new vehicle sales. Sales has been relatively steady. "There are three components in this transformation. One is diversification. There is beauty in having many things to offer. In 2004, there were 294 brands and in 2013 there were 340. Domestic retail market share has grown in 2013 vs. 2010. We see more of a meeting between luxury cars and mainstream cars. The second is personalization. Everybody wants your car to be an extension of yourself. Car buying is an emotional process. There are so many choices nowadays. People are also connecting with a good deal. If you get a good deal, you feel better about the process. The third is opportunity. Young people don't like cars that much. That makes it an interesting challenge for us in the industry. There is a chance to convert them though."
Brian Johnson talked about three mega-trends:
Then there was a question-and-answer session with the three economists.
After the break, Mark Phelan, Auto Critic & Columnist, Detroit Free Press, says the most exciting vehicle is the 2015 Ford Mustang. "Look for exciting things like material and drivetrain. The Ford F-150 is one of the top trucks. Take a look at the vehicles from Hyundai and Kia. Audi will have a concept tomorrow and it will be the smallest crossover. Chrysler 200 has a potential for surprise. It is a very impressive car and has a lot of new technology." He added that GM is relatively quiet on the product front. "Chevrolet will have a good-looking fast car. Volkswagen is tweaking things on vehicles that already exist. Where is the competition for the Explorer? There is an increasing emphasis on light weight vehicles. And why doesn't Americans buy more diesels? Diesels are slowly creeping into the market," he says.
Jim Lentz, Chief Executive Officer, North America Region, President and Chief Operating Officer, Toyota Motor North America, Inc. and Senior Managing Officer, Toyota Motor Corporation says the auto industry will continue to grow in 2014 but at a moderate pace. This year will enter a leveling-off period. The economy is showing signs of a robust recovery. Unemployment rate is dropping. Employers should add about 250,000 jobs per month. Americans can start spending freely again, especially in housing. A big boost in GDP, jobs and housing paints a rosy picture in 2014. Household net worth rose 2.6 percent. Analysts predict a 16.2-16.4 million vehicles. Interest rates will remain at historic low levels. Toyota/Lexus/Scion has reached the 2.23 million mark.
"Toyota was the number one selling car," Lentz explained. "Lexus sales increased by 12 percent. We are building fun-to-drive cars. The new car today is the Lexus RC with a 3.5-liter, V6 engine and an eight-speed transmission. Toyota/Lexus has a lot of great products. We have introduced 15 new hybrid vehicles. Hybrids are a viable technology for the future. By 2015, in California, there will be 20 hydrogen stations. The future is here."
Upcoming SAA events include a young professionals network tour of the Bloomberg News Offices in Southfield on Thursday, Feb. 6; The Inaugural Auto Warranty/Recall Summit at the AIAG Offices in Southfield on Wednesday, March 5 and 5th Annual OEM Purchasing Summit at American Axle in Detroit on Tuesday, May 13.
For more information or to register for the upcoming events, visit www.saaautoleaders.org.
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Jim Lentz, CEO of Toyota Motor North America
William Strauss, Senior Economist at the Federal Reserve Bank of Chicago
Jessica Caldwell, Senior Director of Industry Analysis at Edmunds.com
Brian Johnson, Managing Director & Senior Equity Analyst at Barclays
Mark Phelan, Auto Critic & Columnist at the Detroit Free Press
SAA Board President Michelle Krebs welcomed everyone.
This page was last updated on Mon, January 20, 2014 11:54 PM
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