SOUTHFIELD, Mich. — With a little bit of momentum building in the market, light-vehicle sales for 2010 could climb to 11.5 million units following a 21.2-percent decline for the auto industry this past year, according to R.L. Polk & Co.
This would be a 10.2-percent improvement from 2009, when auto sales were just over 10.4 million, a 27-year low, Polk noted.
"We are encouraged by a light vehicle industry SAAR above 10 million for three consecutive months and record low inventories at dealerships," explained Dave Goebel, North American forecast consultant for Polk. "While industry levels remain far below their normal levels, there seems to be some momentum out there."
In fact, the auto market closed 2009 with three consecutive months of having a seasonally adjusted annualized rate of above 10 million, according to Polk, including December's SAAR of 11.9 million.
There were roughly 1.03 million units sold in the final month of the year, a 15.1-percent improvement over the same period of 2008.
As far as the overall economy, Polk projects that real gross domestic product growth in the U.S. during the year will be 2.9 percent. Moreover, Polk suggests the U.S. is in a recovery period.
"We believe wealth accumulation and improving consumer confidence added to GDP growth in the fourth quarter of 2009 and we see slow but steady GDP growth in 2010," Goebel shared.
That said, there are risks that many hinder how quickly the economy grows, analysts noted.
Explaining this in more detail, they stressed that with government stimulus programs drawing to a close, it highlights the importance of consumers becoming confident enough to continuing spending. Moreover, there is a strong need for businesses to invest and hire.
If these things don't happen, the economy might not recover as quickly.
"The risks to this forecast are based on the consumer, employment and the housing market," Goebel noted. "While the unemployment rate seems to have stabilized, the rising number of bankruptcies could continue if displaced workers do not find the income or other support to meet their household debt obligations.
"This in turn would negatively impact the housing market by increasing future foreclosures and putting downward pressure on home prices," he continued. "Federal support such as the Federal Reserve's purchasing of troubled mortgage-backed securities and the recently extended new home buyer program are set to expire later this quarter.
Goebel added: "As government stimulus programs end, consumers must have confidence to continue spending and businesses need to invest and hire, otherwise the economic recovery could slow in 2010."