Auto analysts predict just under 17 million vehicles will be sold in 2020

Panelists at the 2020 SAA Automotive Outlook Conference in Lathrup Village, Mich. (Photo by Jerome Rzucidlo/AmericaJR)

LATHRUP VILLAGE, Mich. — The 33rd Annual Society of Automotive Analysts Automotive Outlook Conference was held at The Mint at Michigan First Conference Center in Lathrup Village. Analysts discussed their projections for vehicle sales, how the economy is doing in relation to the automotive industry and how electric vehicles come into the picture.

Oren Klachkin, Oxford Economics, says the global economy will grow 2.5 percent in 2020.  The economy is slowing and doesn’t seem to be on a firm footing.  “We are not going into a recession.  There is stalled trade growth and weak investment is trending down going forward.  Global consumer spending is holding at a steady pace.  The labor market has been holding fairly strong also.”

“What are the chances of recession this year?  The probability is very low.  The U.S. has the longest economic expansion on record.  We look for some softness in Q1.  The trend will be slow in investment and a weaker environment on consumer spending.  The labor market is still strong with 111 consecutive months of expansion.  Wage growth slipped to 2.9 percent in December 2019,” says Klachkin.

“Business confidence has risen in 2015 and is softening looking forward.  The dollar has been fairly strong.  U.S. growth and overseas growth  has been fairly constant.  Looking ahead in 2020, we think it will stay the same.  Inflation has not risen at a firm pace.  Low inflation will prompt one more fed rate cut in 2020.  We look for that to happen in June.”

“The new China agreement made last week hasn’t moved the needle on the forecast.  Trade policy uncertainty remains high.  We forecast U.S. GDP growth will be moderate to 1.7 percent in 2020 following an estimated 2.5 percent advance in 2019,” added Klachkin.

Augusto Amorim, LMC Automotive, stated that global sales are expected to inch down by 0.4 percent in 2020.  North America will be the exception.  U.S. sales fell in 2019 but still tops 17 million.  Light vehicle sales were shy of 17 million units in 2019.  There are a lot of new premium brands entering the market.  The average transaction price is about $35,000.  More expensive vehicles performed better.  Incentives grew by 2.5 percent in 2019 estimating $4,064.

“Younger buyers are leaving the market by four percent last year.  Lease returns soared by 14 percent.  Sales are unlikely to top 17 million units through 2025.  Toyota outsold Ford by 14,000 light vehicles last year with the RAV4.  GM was number one.  Large pickups, Silverado and 1500 will fight for second position.  Ford F150 is still number one in that category.  SUV’s sales were up three percent.  They account for more than 50 percent of the market this year.  Fierce SUV competition will limit market share gains,” says Amorim.

“Cars have been down and dropping.  Cars in the U.S. still outsell total industry in Canada and Mexico.  Korean cancelled most of their programs.  Asians have five percent of the market.  EV’s sales were pretty flat.  EV’s would possibly remain under 10,000.  One million units are the forecast.  U.S. represents about 15 percent of global EV sales.

According to Joe Langley, IHS Markit, U.S. light vehicle sales have ane inventory correction in progress.  They have the lowest inventory since September 2015.  “We have been depleting inventory pretty rapidly.  In North America, there is a flat and stable production environment.  There will be a lot of new vehicles this year especially light utility, not cars.”

Exports grew 11 percent to 1.6 million units.  Mexico is expected a 4.0 percent growth from 2019-2026.  “Cars will diminish down by 14 percent.  Trucks will be up 2.7 percent.  Utility vehicles will be up 17 percent through 2026.  Trucks remain steady.  Electrification stems fuel price fears.  Production has increased to three shifts and accounts for 50 percent of production going forward.  Consumer shift to U.S. light utility vehicles continue to shift.”

Glenn Stevens, MICHauto, talked about the impact and opportunity of autoMobility.  The auto industry contribution to the Michigan economy is $225 billion.  The auto industry contributes 3.5 trillion to the industry, and the personal mobility in a shared economy is $7 trillion.

“Detroit put the world on wheels.  There are 21 OEM’s in Michigan.  Currently Michigan has 10 assembly plants.  There is a tremendous defense, cyber and aerospace industry here.  This is a big asset for us.”  The world is changing, clearly moving into the digital age.  Information is everywhere.  Driver’s have a choice.  Transportation is about convenience.  The world’s most valuable resource is now data, such as reducing congestion, conserving energy and reducing accidents.  Technology will help unlock the future. 

“More and more partnerships are needed for electrification.  Ford and Volkswagen is an example.  Rivian is getting a lot of attention.  Hyundai and Aptiv are going to set up a four billion dollar autonomous driving venture,” said Stevens.

“I started a focus group in Silicon Valley and they described Detroit as “metal benders”.  The tech industry is clearly in Silicon Valley.  But Michigan continues to lead, evolve and compete with our advanced industries and lead in development and manufacturing of next-gen mobility.”

The next speaker was Daron Gifford,  from Plante Moran, who says technology is changing rapidly.  “Where is the automotive industry going?  Answer:  autonomous, mobility-sharing, electrification and new ways of manufacturing the vehicle.” 

Today we have private vehicle ownership, the future is shared mobility.  Today we buy vehicles, the future we will be buying miles.  Autonomous and mobility projection for 2050 include less private vehicles in operation, but more vehicle miles travelled in shared vehicles.  Therefore annual new vehicle sales will drop.

Powertrain components will transition to EV technology over time.  China and Europe will take the lead on electrified vehicle production,” says Gifford.

Ted Cannis of Ford noted that the electric vehicle battery cost will be going down.  “You can get a lot of energy in a small amount of space.  We will see tremendous BEV growth and unprecedented level of design and marketing activity.  The U.S. will have 1.5 million BEV’s or 8.5 percent of the market by 2025.  Our strategic approach focuses on building a foundation for long-term success in full battery electricity.”

Exciting and capable fully-electric vehicles are a key to success.  “We need a lot of change with the new “gotta have it” experiences to create excitement.  It has to be fun to drive, with a new design, quiet powertrain and low ownership cost which are some attributes customers love.  Ford has alliances with Mahindra, Volkswagen and Rivian to create this.

“The Mustang Mach-E is making an SUV that is bold, capable and dynamic.  There will be ample space for your gear and three seats in the back.  We are targeting 0-60 mph in the mid three-second range and over 300 mile range.  The Mustang Mach-E SUV charges up to 47 miles in ten minutes.  You can monitor the charging process of your BEV anywhere on your phone,” added Cannis.

At the end of the presentations, Michelle Krebs, Cox Automotive, was the moderator for the Q & A session.  What are the key factors driving the low chance of a recession?  Klachkin answered with consumer spending is on a solid base.  If the job market were to slow down, that would bring a greater risk of a recession.

When will manufacturers build the shared vehicles we will use in the future in a production mode?  Gifford replied with cost savings is needed and infrastructure needs to be fixed and more charging stations.  All the pieces have to come together.  The next five years we will get smarter and by 2030 we’ll put some of these pieces together.

Why is Tesla stock at a record level?  Cannis answered with people love the car.  People are buying the car.  Tesla is strong on data.  We and Ford included are not strong on software and we’re trying to catch up.

Scott Tappan, SAA introduced the speakers for this years’ conference.  He added that drivability and driver safety has molded the automobile industry.  A lot did happen in 2019 with plant closings and the biggest strike in automotive history.  What will 2020 bring?

The next SAA meeting will discuss “Are Consumers Ready for the Future of Mobility?” It is scheduled for February 18 at the Detroit Marriott Livonia. For tickets and more info, visit https://saaauto.com/event/are-consumers-ready-for-the-future-of-mobility/

33rd Annual SAA Automotive Outlook Conference slide

Michelle Krebs of Cox Automotive served as the moderator.
(Jerome Rzucidlo/AmericaJR)
Augusto Amorim, Senior Manager, Americas Vehicle Sales Forecasts at LMC Automotive
(Jerome Rzucidlo/AmericaJR)
Joe Langley, Research and Analysis Associate Director, North American Vehicle Production Forecasting at IHS Markit
(Jerome Rzucidlo/AmericaJR)
Glenn Stevens, executive director of MICHauto
(Jerome Rzucidlo/AmericaJR)

Daron Gifford, automotive industry consulting leader at Plante Moran
(Jerome Rzucidlo/AmericaJR)
Ted Cannis, global director of electrification at Ford Motor Company
(Jerome Rzucidlo/AmericaJR)

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