Strong outlook for the Americas but some risks remain

The automotive outlook for the Americas remains positive according to Jeff Schuster, Executive Director, Global Forecasting for J.D.Power at the company’s Global Automotive Outlook Spring Conference in London.

NAFTA light vehicle sales are climbing towards pre-crisis levels said Schuster, predicting 2011 sales of 15.5 million units, an 11% increase year-on-year. He forecasts a further 15% growth in 2012 to 17.6 million.

In the critical US market, Schuster sees a slow, progressive sales recovery as follows. Figures are in millions.

2010 2011 2012 2013 2014 2015
11.6 13.0 14.9 15.7 16.3 16.5

New and re-designed models will re-ignite a hyper-competitive market and product activity will skew towards small vehicles. The shift to the non-premium, small segment will be more pronounced and is likely to lead to additional body types. Some growth is expected in the premium segment, but at the smaller end of the market with new products. The large segment (including pick-up trucks) will suffer continued decline but will not become extinct.

Schuster highlighted some of the inventory challenges posed by the Japan disaster. The Toyota Prius is down to just 18 days supply, the Nissan Juke to 26 days, the Honda Insight to 27 days and the Subaru Impreza to 37 days. Further disruptions are likely in the coming weeks and selected North American-produced models could also face shortages by May, depending on Japan-sourced component availability.

Schuster forecasts North American production this year at 12.8 million units, an increase of 8% year-on-year, but cautions that the Japan crisis risk is 100,000 to 150,000 units, some of which may spill over into 2012.

There is still over-capacity in North American production which is projected to be 29% above domestic sales in 2013 compared with 30% above in 2006. Schuster forecasts output as follows. Figures are in millions.

2010 2011 2012 2013 2014 2015
11.8 12.8 13.9 14.7 15.5 15.9

In South America, Schuster sees the improvement as slowing but still evident. The reduced pace of the recovery is because of increasing inflationary pressures due to high global commodity prices. GDP growth is expected in the 4% to 5% range compared with the 6.3% estimate for 2010. Light vehicle sales have cooled in early 2011 with Brazil showing 3.4 and 3.5 million in January and February, down from 4.0 million in December. Argentina, at 664,000 and 774,000 was also down from December’s 885,000. Schuster, however, predicts Brazil to account for sales of 3.6 million units this year, up 6% year-on-year, and Argentina to reach 77 million, up 14%.

His light vehicle sales forecasts for South America are as follows. Figures are in millions.


 2010 2011 2012 2013 2014 2015

4.8 5.2 6.0 6.5 6.9 7.4
Brazil 3.4 3.6 4.2 4.6 5.0 5.4

In the South American production scenario, Brazil will continue to drive the growth. Figures are in millions.


 2010 2011 2012 2013 2014 2015
Brazil 3.16 3.52 3.57 3.96 4.27 4.39
Argentina 0.72 0.77 0.79 0.83 0.85 0.87
Others 0.26 0.30 0.34 0.36 0.38 0.39
Total 4.14 4.59 4.70 5.15 5.50 5.64

In summary, Schuster said that in North America there would be a progressive recovery of both sales and production. The near-term will see some impact from the Japan crisis but we can expect volumes to be made up for within 2011. Product activity and competition will be strong with more than 60 ‘new’ vehicles coming on stream each year. The risks to the market include a slowdown in the economy, a drop in consumer confidence and a lessening of credit availability.

South America has some short-term risk due to inflationary pressures but long-term growth prospects remain. Brazil will remain the world’s fourth-largest sales market in 2015 and will be fifth-largest in production, up from sixth.