Demand for Light Vehicles Projected to Stay Strong

Aug. 7, 2013
The record-setting pace of light-vehicle sales in the United States – especially for pickup trucks – is  projected to remain high, and that should boost freight demand from the automotive industry through the close of the year.

The record-setting pace of light-vehicle sales in the United States – especially for pickup trucks – is  projected to remain high, and that should boost freight demand from the automotive industry through the close of the year.

"The overall trend in vehicle demand has outshined economic growth, and looking forward, the improving economic fundamentals should hold demand at the current level, if not accelerate it over the next several months," noted Jeff Schuster, senior VP-forecasting for research firm LMC Automotive. "With a strong tailwind, it is not unreasonable to think about a 16-million-unit level of demand in 2013."

As a result of robust July sales numbers, LMC is raising its forecast for both retail and total light-vehicle sales in 2013 to 15.6 million and 12.8 million units, respectively – up from previous projections of 15.4 million and 12.6 million units.

"Solid industry sales in July point to a stable market indicating a recovering economy," added Bill Fay, group vp & GM for Toyota’s U.S. division. "Consumer confidence also maintained elevated levels as evidenced by strong retail sales."

Toyota reported total sales of 193,394 units in July, an increase of 12.6% over the same month last year on a daily selling rate (DSR) basis, with sales of its Tacoma compact pickup and Tundra full-size pickup increasing 22.3% and 7%, respectively.

Meanwhile, Ford Motor Co. said its U.S. sales grew 11% in July compared to the same month in 2012 – the best total July sales since 2006 – with retail car sales increasing 13%, sport utility vehicle and crossover sales jumping 19%, and trucks climbing 27%.

"We saw continued strength and growth in our retail business, particularly in the coastal regions of the country," noted Ken Czubay, Ford’s vp for U.S. marketing, sales & service. He added that the OEM’s sales of F-Series pickups increased 23%, with 60,449 vehicles sold, marking the best July sales month for its F-Series lineup since 2006.

General Motors also posted another record month for light vehicle sales, with its dealers delivering 234,071 vehicles in the U.S., up 16% compared with a year ago.

“For GM, July was the most well-balanced month of the year from a retail sales standpoint: trucks were hot, but so were small cars and family vehicles,” said Kurt McNeil, vp, U.S. sales operations. He added that pickup, van and SUV sales were up a combined 16% with full-size pickups up 44 percent-- marking the the best July for those models since 2007.

About 15% of full-size pickup sales were GM's all-new 2014 crew cab, McNeil added, pointing out that double-cab models are now being shipped to dealers and regular cab production begins later this summer. Also, deliveries to small business customers increased 61%, including a 107% increase in full-size pickup deliveries, he said.

Chrysler Group LLC also posted a strong July, selling 140,102 total light vehicle units in the U.S., an 11% increase over July sales last year and the group’s best July sales numbers since 2006.

The OEM added that Ram truck sales overall jumped 31% last month – the largest sales gain of any Chrysler Group brand in July. Sales of light-duty Ram pickups rose 25%, driven largely by crew cab orders, while heavy duty Ram pickup sales increased 35%.

“We continue to see strong retail sales, particularly with our pickup trucks and SUVs, and that has helped to propel Chrysler to our 40th-consecutive month of year-over-year sales growth,” said Reid Bigland, the OEM’s head of U.S. sales.

In terms of how such sales figure affect light-vehicle manufacturing rates, LMC reported that North American light-vehicle production is up 4% through June this year compared with the same period in 2012.

For the high-volume producers, Ford retains the strongest year-over-year increase at 14%, with Fiat-Chrysler holding steady in positive territory with a 1% increase.

By contrast, GM volume is off by 4%, compared with a year ago due to weaker large SUV volume ahead of the upcoming redesign and competitive pressure in the midsize car segment, according to LMC’s data.

The European brands are tracking consistently with the industry growth, averaging a 4% growth rate from 2012. Despite a slowdown in demand for Hyundai, production growth remains robust at 15% year-to-date, while Toyota is on a 3% growth rate from a year ago, the firm noted.

As a result, LMC’s forecast for 2013 North American production volume remains at 16-million units, a 4% increase from 2012. The firm noted that excess capacity is very lean across the region, with some manufacturers and vehicle segments in short supply.

Capacity utilization is expected to remain above 90% for 2013 and into 2014, the firm added.