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Automotive industry off to explosive start to new year

Feb 04, 2013 Philip Burgess

After an extremely successful 2012 campaign, many analysts wondered if the automotive industry's success would continue into the new year. If the early sales numbers are any industry, the sector appears to be in great shape.

"Building on the momentum the industry has been gaining over the past two years, sales remain on a trajectory to return to pre-recession levels within the next few years," said John Humphrey, senior vice president of global automotive operations at J.D. Power and Associates.

A recent J.D. Power and Associates, McGraw-Hill Companies and LMC Automotive report found that total light-vehicle sales through the first 25 days in January 2013 exceeded 1 million units, en route to an 8 percent year-over-year increase. The study also revealed that new-vehicle sales have fared even better with a 14 percent year-over-year growth. January's seasonally adjusted annualized rate for retail sales totaled 12.9 million, ahead of the projected 12.4 million units and 2 million units higher than January 2012's mark.

Auto sales could continue growing
Debt collection agencies benefited significantly from the auto sector in 2012, and if recent predications are accurate, that should continue over the next few years.

North America produced 15.4 million light-vehicle units in 2012, the highest mark in five years and 18 percent higher than 2011's totals. LMC Automotive projected that number to grow over the next two years, increasing to 15.9 million in 2013 before surging to 16.6 million in 2014.

Jeff Schuster, senior vice president of forecasting at LMC Automotive, believes that the stagnation of European producers has caused the worldwide auto industry to rely more on the United States.

"The concern now is shifting from the continuing recovery to whether the automotive supply base will be able to keep up with hearty demand," Schuster said.

A separate study by PricewaterhouseCoopers (PwC) projected that the worldwide automotive sector will experience a 5.1 percent year-over-year increase in 2013, with auto purchases in the U.S. rising by nearly 1 million. Rick Hanna, global automotive leader at PwC, said that he expects the worldwide auto industry to "prosper in 2013 from emerging market growth and remaining pent-up demand in the U.S."

According to recent statistics provided by the Commerce Department, auto sales and the student loans contributed most to consumer debt growth in November. In total, Americans borrowed $16.1 billion more in November compared to October, with non-revolving debt - which includes auto and student loans - jumping $15.2 billion.