Archive for Tuesday, January 3, 2012

U.S. auto industry poised to post another good sales year

January 3, 2012


After hitting a 30-year low in 2009, U.S. auto sales are poised for a second straight year of growth — the result of easier credit, low interest rates and pent-up demand for cars and trucks created by the Great Recession.

The sales forecast bodes well for the industry’s continued recovery and for the broader American economy.

In 2009, Detroit automakers were in peril. Car sales plunged as unemployment soared, and loans became harder to get. Chrysler and General Motors filed for bankruptcy protection. Ford avoided bankruptcy only by borrowing billions.

Now credit is more available, interest rates are low, and Americans need to replace old cars and trucks they kept during and after the downturn. Millions of drivers in their teens and 20s are expected to buy vehicles, too. That could mean more jobs, more factory shifts and overall growth.

Vince Powell, a retiree from Winfield, Pa., recently traded in his wife’s 7-year-old Chrysler 300 luxury sedan for a 2011 model. The old car had 145,000 miles on it, but it was the deal he got that most attracted him: a low interest rate (2.7 percent per year), a six-year loan term and a big discount off the $31,900 sticker price.

“I’m getting a $300-per-month payment,” he said just before closing the sale at Beaver Motors in Beaver Springs, Pa., near Harrisburg. “I’ve never had a new car for 300 bucks a month.”

In their effort to survive, all three automakers downsized and positioned themselves to turn profits — even if sales remained depressed. Now that sales are rising, the outlook has brightened considerably.

Automakers report U.S. sales for 2011 on Wednesday. When final figures are calculated, sales of new cars and trucks are expected to reach 12.7 million, up from 11.5 million in 2010 and 10.4 million in 2009, the worst year since 1982.

In 2012, they could climb as high as 13.8 million, close to what experts consider a healthy market — about 14 million.

December sales could reach an annual rate of 13.4 million, which would make it the second-strongest month of the year. Only November was better. Auto website forecasts a 37 percent rise in sales at Chrysler Group LLC in December, thanks to new and revamped products such as the Jeep Grand Cherokee SUV and the Chrysler 200 midsize sedan.

Carmakers have announced plans to crank up factories and add thousands of jobs. Last January, Ford said it would hire 7,000 workers over the next two years. During the summer, GM said it would add 2,500 at the Detroit factory that makes the Chevrolet Volt electric car. Volkswagen hired 2,000 for a new plant in Tennessee, and Honda added 1,000 in Indiana. The industry will add 167,000 jobs by 2015, a 28 percent increase over current levels, predicts The Center for Automotive Research in Ann Arbor, Mich.


budman 6 years ago

12.7 million new cars on the road this year, 13.8 million expected next year. I see no way in which the earth or the environmentalists could ever win

Maddy Griffin 6 years ago

Agreed! Why do Americans feel the need to get a new car every few years?My car is 12 years old and was handed down to me 3 years ago.My daughter bought it brand new and gave it to me when she bought her new car. I'll drive it until the wheels fall off.

just_another_bozo_on_this_bus 6 years ago

When the environment is damaged/destroyed, it isn't just environmentalists who suffer.

jafs 6 years ago

We would need to do a very comprehensive lifecycle analysis of both vehicles to accurately determine which is better for the environment.

That's not easy to do, unfortunately.

But, I'm pretty sure that exchanging cars every few years is a bad idea, environmentally speaking.

jafs 6 years ago

I'm sure that's a bit difficult, but the stock market is essentially legalized gambling.

There are no guarantees, and there's always the risk of losing money.

Anybody who invests in it should know that going in, and take it into account.

jafs 6 years ago

This is a real problem - our economy depends on the continual purchasing of new items.

At the same time, from an environmental standpoint, it's better to limit that sort of thing, and buy less, used, etc.

I don't see any way that the two needs can be met simultaneously.


jafs 6 years ago


But, that doesn't solve the problem I mentioned.

If everybody buys more new items, it would be better for the economy but worse for the environment, and vice versa.

How do we have a healthy economy and also a healthy environment?

Flap Doodle 6 years ago

Are the Volts still going up like the Hindenberg?

jhawkinsf 6 years ago

Anyone hear the news story last week about the sale of U.S. fighter jets to Saudi Arabia? I was listening to NPR when they said it would provide 50,000 American jobs. That's a lot of jobs to snub our noses at even if we don't like that kind of sale or even if we don't like our military industrial complex being involved in that type of thing.
The same could be said for the auto industry. I could make a wish list a mile long about converting from fossil fuels, better efficiency, etc. But I also don't want to see the unemployment lines get even longer. So I'm glad when I hear we're buying "American" while we continue to work on that wish list.

beatrice 6 years ago

Thank goodness we had a president who recognized the importance of keeping our auto industry afloat.

beatrice 6 years ago

Then you tell me. At what cost to other American industries? I see it as a benefit for the American auto industry over the foreign auto industry. This is about an American industry doing well. Most would see that as a good thing. I would rather they never have needed help from the government, but they got it and it has proven the right move to help the industry in our country succeed. I'll take that over wanting to see them fail and foreign auto makers to benefit.

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