U.S. Auto Sales May Slow Through 2016, AlixPartners Says

U.S. auto sales growth may slow through at least 2016 as high unemployment lingers and young people drive less, according to a report by AlixPartners LLP.

Car sales may rise 12 percent to 14.3 million this year and 3.5 percent to 14.8 million in 2013, Southfield, Michigan-based AlixPartners said. In the three years through 2016, sales may rise 7.4 percent to 15.9 million, the company said. That trails the market’s pre-recession high of 17.4 million in 2000.

There are 5 million fewer potential auto buyers in the U.S. compared with 2007, as employment recovers at a slower rate than after other recessions since World War II, the report said. AlixPartners’s findings follow moves by the Federal Reserve this month to cut estimates for 2012 growth and extend a program to keep long-term interest rates low in a bid to prevent expansion from stalling and reduce unemployment which stands at 8.2 percent.

“If people don’t have jobs, they don’t buy cars,” John Hoffecker, a managing director and head of AlixPartners’s automotive practice, said in a statement alongside the company’s report. Companies should make “aggressive, well-informed investments in product -- all the while recognizing that they’re unlikely to get a whole lot of help from the economy.”

Previous Generations

Auto sales may also decelerate in part because younger people are less likely to have driving licenses and drive fewer miles than previous generations, AlixPartners said.

Auto sales in Western Europe may decline 6.9 percent to 13.5 million in 2012, for the fifth-consecutive annual drop, AlixPartners estimated. Deliveries in the region will rise to 14 million in 2013 while remaining below 2007’s peak of 16.8 million through 2021, according to the report.

European automakers, excluding Bayerische Motoren Werke AG and Daimler AG, will use less than 70 percent of plant capacity this year and remain below the 75 percent to 80 percent range needed for companies to break even until 2015, according to the report.

In the U.S., where 17 plants have been closed since 2007, capacity utilization will rise to 89 percent in 2012 and 2013, from 63 percent in 2009, according to the study.

Auto sales in China may rise to 19.2 million this year, about 1 million lower than AlixPartners estimated last year. Sales in the world’s most populous country may increase to 21.4 million in 2013 and 23.5 million in 2014, the report said.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE