After a near collapse at the height of the Great Recession, the streamlined U.S. auto industry defied the odds and outperformed the greater economy this year with solid sales increases, job growth and product innovations that signal that a full industry recovery no longer is just possible, but probable.
Credit better quality and pent-up consumer demand for the industry’s slow, steady improvement. Customers who were unwilling to gamble on automobile purchases during the recession are coming back to showrooms because the average age of vehicles on U.S. roads is more than 10 years — the highest ever.
U.S. car buyers also are getting comfortable with making large purchases in the volatile economy, experts say.
“And that’s a big behavioral change from what we saw in ’08 and ’09. That’s good for the industry,” said Jesse Toprak, the chief industry analyst for TrueCar.com, an auto-pricing website.
After selling roughly 11.8 million cars and trucks last year, U.S. vehicle sales to businesses and consumers are expected to hit nearly 12.8 million in 2011, Toprak said. That’s up from 10.6 million at the height of the Great Recession in 2009.
Through November, new-vehicle sales had logged six straight months of year-over-year gains. That should continue in December, when 1.2 million vehicles are likely to be sold, Toprak said.
Those numbers are well off their pre-recession levels, which topped 16 million vehicles a year. But the industry’s plodding recovery in the past two years has helped stabilize the greater U.S. economy and power a regional recovery in the Great Lakes and Rust Belt regions, where auto production is king. Both manufacturing-rich areas have seen some of the sharpest declines in unemployment in the country in the past two years as automakers regain their financial footing.
U.S. and foreign automakers are poised to add nearly 167,000 U.S. jobs by the end of 2015, according to the nonprofit Center for Automotive Research in Ann Arbor, Mich. That breaks down to 30,000 hourly and salaried workers at the Big Three U.S. automakers, 17,000 jobs at foreign automakers and about 120,000 auto-supply sector jobs.
“The industry has pretty much hired back just about everybody from the automotive side that had been laid off. And now they’re hiring fresh, so they’re actually adding to their rosters. And it’s not just the Detroit automakers. It’s everybody,” said Aaron Bragman, senior analyst at IHS Automotive in Northville, Mich.
Most analysts say the industry’s growing stability is sweet vindication for the federal government’s $80 billion bailout, which allowed General Motors and Chrysler to reorganize. The Center for Automotive Research estimates that the bailouts saved more than 1.1 million jobs in 2009 and another 314,000 in 2010, while avoiding personal income losses of more than $96 billion.
Today, all three major U.S. automakers are on the comeback trail with increased investment in U.S. manufacturing plants, improved new models, greater profitability and thousands of new hires.
Chrysler’s rebound has been dramatic. In its best November since 2007, the beleaguered automaker sold more than 107,000 vehicles in the U.S., up 45 percent from November 2010. It was the 20th consecutive month of year-over-year sales gains for Chrysler and the best November for Jeep brand sales since 2003.
Foreign automakers also are expanding their U.S. operations. In May, Volkswagen opened a new plant in Chattanooga, Tenn., that now employs 2,000 people. The Mercedes-Benz factory in Vance, Ala., will add 1,000 jobs when it begins producing the C-Class in 2014.
Toyota just opened a new $800 million plant outside Tupelo, Miss., where about 2,000 workers will assemble the popular Corolla. The plant is Toyota’s 14th in North America.
Korean automakers Hyundai and Kia saw their U.S. vehicle sales explode this year. But U.S. sales of Japanese autos faltered after a tsunami in northern Japan disrupted production in March and caused worldwide inventory shortages during the summer months, when car sales are hottest.
“They didn’t have full strength of inventory because they weren’t able to make enough cars,” Bragman said.
U.S. automakers were prepared to capitalize with new designs and models. Chevrolet’s new Cruze became the second-best-selling car in its class this year, behind the traditional industry leader, Toyota’s Corolla.
Improved quality among all automakers also helped drive sales.
“You’ve got to give the automakers some credit here,” Toprak said. “The new products that have come out of virtually every single automaker in the last year or two have been the best that consumers were ever offered. When you have great product, it fuels buying.”
Ford’s redesigned Explorer has continued strong sales even as the U.S. market has moved away from SUVs. This year, the Explorer moved from a truck-style, body-on-frame design to a lighter, more fuel-efficient one-piece body architecture, which most cars have.
“It has been a big success and is selling very well,” said Bernard Swiecki, senior project manager at the Center for Automotive Research.
Source: MCT Information Services