US: automakers need to brace for decreasing demand image

The US auto sales last month rose 4.6 percent to a total of almost 1,455,000 units, with an annually adjusted industry rate – or SAAR – of 16.45 million autos. The figures were below expectations, signaling harder times are ahead for the carmakers competing on the world’s second largest auto market.

The US brands for example are on track to reach their best deliveries in almost a decade, but other brands – especially the Asian rivals are already experiencing rougher times. Auto executives claim the auto industry is healthier than it was before the last great recession, thanks to heavy restructuring and cost control- but the recent shareholder performances of GM, Ford and Fiat Chrysler US have been less than stellar – meaning investors don’t share the same positive views.”The party may be starting to wind down,” comments Charles Chesbrough, senior principal economist for IHS Automotive. “We’re still looking at a good couple years of strong demand, but the days of big sales increases are behind us.” Industry officials put the overall US market this year on track to hit 17 million units, but the sales performance in March and April might paint a different picture.

Still, the cosnumer confidence is on the rise, thanks to healthy economy indicators, such as employment rates, housing prices and the fact that gasoline prices continue to remain very low and lift the deliveries of gas guzzling models such as large pickup trcuks and sport utility vehicles. But the weakness is signaled by the plummeting sales of smaller models and even family sedans, while revenues could decline because of pricing wars.

Via Reuters