Predicted rise in vehicle sales belies financing, auto parts concerns

A recent report by consulting firm A.T. Kearny found that in the coming years, automobile sales will increase while availability of auto parts will be constrained, according to FleetOwner. By 2013, the firm predicts approximately 16 million vehicles will be sold per year, up by nearly 3 million from 2011. The primary reason for the spike in demand is an escalated interest in replacement vehicles, given the fact that the average car is currently 10.4 years old. However, the availability of auto industry financing, total cost of ownership and the earthquake in Japan have stymied production of parts. The study predicts that these shortages will affect U.S. sales in 2011 by 200,000 units. StratoServe adds that the Japanese crisis has hindered the production of critical dashboard electronics. As a result, the Japan-made hybrid Prius will now likely be in short supply. Dan Cheng, leader of Kearny's automotive practice, believes original equipment manufacturers need to be proactive in managing supply risk. "OEMs will have to respond rapidly to shifting customer demand," he told the news source. "Those that have a flexible manufacturing capability and a responsive supply base will win the day."