What's In Store for the Auto Industry in 2011

As the US auto industry slowly pulls itself back from the brink of collapse, signs of a comeback in 2011 are on the horizon. Since last spring, two leading economists at the NADA/IHS Global Insight Forum in NYC predicted a return to more normal economic conditions by the end of 2010. As a result, they forecast U.S. light-vehicle sales will reach 14 million units in 2011 and reach previous sales levels of over 17 million by mid-decade. However, market share among automakers will remain extremely fluid.

Many auto industry analysts believe 2011 is going to be a very important year, each manufacturer facing its own unique challenges. Ford’s success partly depends on paying off the debt it took on while credit was still available, said James Bell, executive market analyst with Kelley Blue Book.   The key for GM in 2011 is the success of its initial public offering. General Motors needs money from that to pay back its share of the bailout and thus the government becoming a minority stakeholder in the company. Doing such will allow them to demonstrate that the government may still be an investor but it is no longer the boss.  A key to Chrysler’s success will be fuel prices - Chrysler, now owned by Fiat, will soon be selling “a bunch of stylish, smaller and fuel-efficient” Fiats in the U.S., cars that will appeal to buyers looking to improve fuel efficiency amid higher prices at the pump.

In order to stay competitive, automakers will need to design and build vehicles that fulfill the requirements of consumers in both established and emerging markets, concentrating on more user-friendly and low-cost vehicles that are also the most highly developed technologically. Also they will continue to move their production facilities from high-cost areas such as North America and the European Union to lower-cost regions such as China, India and South America, determined by two important aspects: the cost and the demand. However, much of what happens to the automakers will depend on the economic evolution and the number of people who have the money to buy their cars. Even if the analysts don’t agree on the rhythm of the recovery, all expect higher sales next year.