US auto industry sales are expected to touch 17 million units in 2015. This is an increase of over 5% as compared to the industry figures in 2014. Besides individual purchases, rental car companies and government agencies are driving this forecast. This spike in sales is fueled by improving U.S. economy which is expected to grow between 2% to 3% in 2015 and lowering loan interest rates. Some other important factors which are leading to increased sales trajectory is the shift of technology from gas guzzlers to more fuel efficient cars, low fuel prices and increase in miles driven. While safety continues to be a priority for auto manufacturers, the rising demand in fuel efficient vehicles is driving the numbers. This overall shift of choice from flamboyance to rationalization has become evident especially after the troubled times experienced by Americans in the recent past. The industry had hit a low of a little over 10 million units in 2009. The most popular category continues to be SUV and CUV, followed by van, pickup, small car, luxury car and mid-sized cars. Hybrid cars are said to be the future of auto industry and most auto companies have already invested their resources in these futuristic hybrid technology.
U.S. auto majors
Despite last year’s recall episode of 800,000 units of its small cars due to faulty ignition switches, Detroit based General Motors Company (GM, Financial) still remains the market leader of US auto industry, followed by Ford Motor Company (F, Financial). Ford is very optimistic and feels that the unit sales figure for 2015 may hit the 18 million mark as well. GM and Ford are on a hiring spree and trying to cope with demand by employing a second shift. Not very far behind in terms of market share are Toyota Motor Corporation (TM, Financial), Honda Motor Company (HMC, Financial), Nissan Motor Company Ltd. (NSANY, Financial) and some other domestic and international brands which are leading players in U.S. as well as in global markets.
Global auto arena
Besides the U.S. markets, these companies are selling in big numbers in the economies of the world. India, China and some South American countries are driving the growth charts for these companies. Some of their popular models are received equally well in these new economies as well. Ford Fiesta, Ford EcoSport, Chevrolet Spark, Toyota Camry, Toyota Etios, Toyota Land Cruiser, Toyota Innova, Honda CRV, Honda Civic, Honda Accord, Honda Jazz, GM Hummer, Nissan Sunny and Nissan Micra are very popular in these markets. Auto manufacturers are balancing their profit margins by shifting production facilities from North America and Europe to more cost effective regions like China, India and South America. This trend is only going to further intensify, thereby giving the auto makers an edge to tide over dull demand.
Our take
Replacement demand had managed to keep the auto industry afloat in the aftermath of the great recession but consumer confidence is regaining ground and the industry sentiment is once again moving towards emphasis on new unit sales. And the upswing is here to stay at least for the next few years. In fact industry analysts have pegged the auto sales to reach 20 million units by 2018 after which the sales are expected to flat or slow down. As of now the auto industry seems to be in a racing mood so it would be profitable proposition to place the bets on any of these auto giants.
