A SMOOTH RIDE FOR CARMAKERS?
The views are getting better for U.S. car makers, as they continue their ascent. An improving economy, more attractive financing options, and pent up demand helping smooth the road despite the speed bumps imposed by higher gas prices.
Overall U.S. auto sales rose more than 15 percent in March, rounding out the best quarter since 2008. General Motors' sales, although below forecasts, still jumped almost 12 percent versus a year ago,Ford up 5 percent and Chrysler soaring 34 percent. Based on those strong results, IHS Automotive Director of Research Rebecca Lindland increased her forecast for the industry:
Rebecca Lindland: "Things in the auto industry are looking great. We've gotten a lot of excess capacity out. We've gotten excess brands out. We've gotten excess dealers out. We've just cut all the fat out and now we are really running as a lean, mean, fighting machine."
Pent up demand is also a key sales driver. The average U.S. vehicle is close to 11-years old. And consumer confidence is now at its highest since February of last year, with more and more Americans back on the job.
And while there are efforts to reign in gas prices- including talk in the global community of opening strategic petroleum reserves- many U.S. consumers haven't changed their gas guzzling ways despite the high prices at the pump.
Rebecca Lindland: "It's really interesting. Because you would think with higher gas prices that we would start to see consumers going in droves to small cars and we are seeing increases in small cars but the March figures also show increases in SUV's and pickup trucks because of nice incentive levels."
Despite the incentives on some vehicles like those- for the most part, incentives trended lower in March- and according to TrueCar.com, the average transaction price for a new vehicle rose to nearly $31,000- a new record high- a signal the industry's drive to increased profitability remains on track.
(Bobbi Rebell/ Reuters)
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