Early in 2012 I went out on a limb with a low-ball forecast for the US market of 13.5 million, I was way low. 2012 sales hit 14,49 million, 1 million higher than I saw coming. Great news for automakers and particularly dealers — maybe some tough news for buyers looking for a deal.
- Easier access to credit with all major OEM’s reaching back into sub-prime.
- Increased consumer confidence with a steady increase in SAAR rate including a strong push at year-end.
- Continued deals as GM and Ford fought to keep the volume if not the market share they gained in 2011 when the Japanese were hamstrung.
- Toyota, Nissan and Honda did indeed gain back their volume and market share as they ramped Japan back up and brought more US capacity online.
- Good product dynamics all around. J3, VW and Chrysler all saw key new products they were intent to push. Ford had a year with the youngest family in the market and while GM has the oldest family, it pushed hard to pump up to volume of light trucks to prepare for the 2013 start of the K2xx launch.
Incentives remained strong throughout the year with Chrysler way ahead of the US brands and Nissan easily topping the list of import volume players. No big surprises here other than the positive development that GM reports that despite these levels of incentives, they saw average transaction prices on their old truck line rise $1,700 – $1,800 per unit telling me they’re pushing a richer mix on the rundown of the 900 trucks – expect that to continue or even accelerate in 2013.
We also saw the continued trend in demand for small cars. As I mentioned above, GM’s heavy spending on truck changeover combined with the need for Asians to push truck volume with $4 a gallon gas sticking around kept large trucks at the top of the chart, while demand for higher fuel economy and some great new small cars from everyone weighed steadily on consumer deals as incentives declined steadily throughout the year. Also I see no surprise in the drop in mid-size incentives with the launch of four strong competitors in this segment mid-year (Altima, Camry, Accord, Fusion)
I wasn’t impressed with the evolution of fleet sales. Total industry fleet mix is around 15%, and GM/F/CHR range from 20%-40% with varying degree of low value rental fleet. IN a “hot market” I would have liked to set this mix move closer to 20% for the locals and move to closer to 10% average. The question long-term change of behavior with GM/F/CHR still nags me.
- Ford fully disclosed that its overall fleet sales dropped from 26% top 21%, but beware that the malevolent rental fleet only dropped 2 points from 16% to 14%
- GM reported that fleet was down 2 points from 32% to 30% with rental relatively flat around 11% and government dropping >1%.
- Chrysler does not disclose fleet breakdown but my estimate is slightly higher than 30%, heavy with rental fleet (CEO Sergio Marchionne has explained that Chrysler declines to report because no one else does?!?!?!)
- Nissan and Toyota were around still less than 10% at the half-year, with the balance of key volume makes below the 15% industry average.
Bottom line, 2012 was much stronger than I anticipated and that’s a good thing. It’s not so much the volume that I am surprised with – I’ve been around long enough to know the industry can pump volume pretty easily – it’s the fact that we’ve seen fairly stable pricing. At this point (before I head out to Detroit to hear all the CEO’s and CFO’s tell me how they are going to do it again – I’ll maintain my caution for 2013.
We have good product outlook, particularly with first half comps for the onslaught we saw in second half last year and the impact of new GM trucks. Credit remains stable, and macro conditions foretell modest growth, but growth nonetheless.
On the negative side, I am still bearish on employment – even though unemployment is dipping, total workers continued to decline as we see many potential car buyers dropping out of the workforce.
We also have the across the board 2% payroll tax hit to everyone and the increased tax rates on upper middle class, this takes some dollars out of the mix. Finally, we’ll see some great new cars in 2013, but nothing like 2012 –more on this after the Detroit show.
My “prévision” is for the US light vehicle SAAR to rise 6% to slightly more than 15.3 million. I know, not too daring. I don’t expect any improvement in virtue from fleet or incentive, but the increase volume should be favorable for profitability, I would be concerned over any excuses for anything other than NA profit growth.
FYI, here’s what I’ve collected so far on 2013 forecast to date. Leave me a comment if you want to add any you may have.
Edmunds: 14.9 million
IHS: 15 million
TrueCar: 15.4 million
Barclays: 15.5 million
Ford: 15-16 million
Polk: 15.3 million
Other issues to think about for the year — and I will write about….
- A weaker yen under Abe-san.
- China outlook, OEM and retai, how good?
- Whatever happened to those electric cars, and who’s paying for all that investment?
- Europe 2013, down again and who will it weigh heaviest on?
- Will GM execute on new Trucks and offset Europe?
- Is Puegeot still around?
- more to come