Study: Auto industry’s sales boom will last to 2018 – USA TODAY
The auto industry’s good times have about two more years to roll and annual sales are expected to top 20 million by 2018, according to Bank of America Merrill Lynch’s annual industry outlook.
General Motors, Ford and Honda are all well positioned to take advantage of the record sales, with robust product plans that should lead to market-share gains over the next four years,
The rosy forecast and future product plans of each major automaker were outlined Wednesday by John Murphy, an analyst for Bank of America Merrill Lynch, who presented the company’s annual “Car Wars” study.
The report is closely watched because automakers go to great lengths to keep their future product plans under wraps. But Murphy’s exhaustive report often sheds light on specific product plans as he assesses the strengths and weaknesses of each automaker.
Murphy said automakers, flush with cash from increasing industry sales, will launch about 58 new cars and trucks on average over the next four years — a sharp increase from the industry’s historical average of 38 vehicles per year.
In his blunt assessments, Murphy concluded that “Nissan seems to be lost,” Honda has a consistent, simple product plan and Fiat Chrysler Automobiles has “a great plan, but can they fund this?”
When it comes to total industry sales, Murphy said he is confident the industry will be selling more than 20 million vehicles annually by 2018 — eclipsing the record of 17.5 million last year.
He cited solid, but not great, consumer confidence and strong, steady job growth since the Great Recession of 2008 and 2009, plus a sharp spike in the total miles driven by Americans.
“When you think about the people who are likely to buy new vehicles in any given year, you’re talking about 5% to 6% of the population,” Murphy said Thursday when he spoke to the Automotive Press Association in Detroit. “They are fairly affluent, well educated and tend to be more confident about the future.”
Murphy’s outlook is much more optimistic than most of his Wall Street peers, who have led many large investors to steer clear of traditional auto stocks on the basis that the North American market is at or near a cyclical peak, while uncertainty in China and South America present other risks.
Murphy also dismisses the impact that the rise of ride-sharing companies such as Uber, Lyft and others will have on the industry, as well as the evolution towards self-driving vehicles.
“The fact of the matter is, demand for getting from A to B is up and is up dramatically,” Murphy said.
So when will this historically cyclical industry see its next slowdown?
“Sometime in the next three to five years,” Murphy said.