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US Car Industry Powers Ahead

The president of global marketing firm J.D. Power, Finbar O'Neill, has painted a rosy picture of the future of US car making. Elsewhere he suggests that the global situation is also positive, except for Europe. Speaking at the 2013 Automotive Forum in New York City on March 26, O'Neill said that US vehicle sales had already increased by 10% annually since 2010.

The president of global marketing firm J.D. Power, Finbar O'Neill, has painted a rosy picture of the future of US car making. Elsewhere he suggests that the global situation is also positive, except for Europe. Speaking at the 2013 Automotive Forum in New York City on March 26, O'Neill said that US vehicle sales had already increased by 10% annually since 2010. He predicted that new car sales in the US should exceed 15.3 million in 2013, increasing from 14.4 million in 2012. O'Neill went on to suggest that combined sales of new cars and trucks should exceed 16.4 million by 2015.
 
The J.D. Power forecasts do depend upon continuing recovery in the US economy and no nasty surprises like oil price hikes and security issues. O'Neill's views though are broadly shared by IHS Global Insights chief economist, Nariman Behravesh, who positioned the automakers' recovery in the wider US economic context, saying: "The private economy in the U.S. is doing well and is shrugging off the nonsense that is going on in Washington." Behravesh also suggested that US businesses in general were doing well despite uncertainty over how to cut the national debt and pointed out that the net worth of US households had grown by more than $5 trillion since the recession.
 
In his Automotive Forum address, O'Neill argued that the US car industry is in better economic shape now than it was in the middle of the 2000s, before the recession. He claimed that in this period, the last time sales topped 16 million, the big three in Detroit relied too heavily on rental car and fleet sales, with associated big discounts. Now US unemployment is dropping, consumer confidence is returning and private sales are driving growth. O'Neill said: "What you are seeing now is this retail market coming back and solid. And you are seeing the daily rental market still within control."
 
The US dealer network is now also healthier, with fewer dealers selling more cars. Detroit's big three made substantial cuts to their networks in the wake of the recession with numbers down from 21,200 in 2007 to 17,500 today. Average car prices have also increased by $3,300 in this period. O'Neill added: "As a result, what you see is a virtuous cycle which over the next few years should mean a very strong industry." Globally O'Neill estimated that sales would rise slightly during 2013 to 82.7 million cars, up from 81 million in 2012. Much of that growth is driven by China which is now the largest car market in the world.

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