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Car sales forecast: 16 million possible if 'fiscal cliff' averted

December 07, 2012|By Jerry Hirsch
  • A Chevrolet Volt moves long the assembly line at the General Motors plant in Hamtramck, Mich.
A Chevrolet Volt moves long the assembly line at the General Motors plant… (Paul Sancya / Associated…)

U.S. auto sales could approach 16 million next year if the federal budget crisis is resolved without an economic shock.

Edmunds.com economist Lacey Plache said there’s enough demand and consumer interest to drive sales up by at least 1 million vehicles next year to the 15 million to 16 million range.

“Consumer spirits are good,” Plache said.

The wrinkle right now is big business, which has taken a cautious approach to expansion while waiting for Congress and the Obama administration to come up with a plan to avoid the so-called fiscal cliff --  mandatory federal budget cuts that many economists believe could toss the U.S. economy into another recession.

“There are all these companies out there sitting on piles of cash, not hiring and not investing because they don’t know what the government will do,” Plache said.

Once a budget settlement is reached, Plache said,  “They will start moving that money around, investing and creating jobs.”

The auto industry should benefit as people get new jobs or become more secure in their current employment.

Crossing 15 million vehicles in annual sales next year would be the highest level since the industry sold 16.1 million vehicles in 2007.  Prior to that year the industry regularly sold 16 million to 17 million vehicles.

But even in the 15-million range, automakers will be making a ton of money. 

Mark Reuss, president of General Motors’ North American operations, said the industry restructuring during the recession lowered the break-even level for automakers to an overall 11 million to 12 million sales range. 

Sales above that level quickly go to the industry’s bottom line and will provide money for more investment in new vehicles, fuel economy, factories and jobs.  

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