The U.S. economy is on the verge of getting better, and autos will be the first to benefit from an upturn, say analysts at IHS Global Insight.
But when it does recover, auto makers will have changed some of their strategies, and the U.S. market will look more like Europe, with four companies claiming shares of between 14% and 19% and none having 20%.
Its not hard predict things will be different, with Penske Automotive Group and potentially Magna International Inc. becoming new players in the global industry, and bankruptcies filed by five auto makers since January.
In the previous 20 years, only two auto makers went bankrupt, says Nigel Griffiths, the head automotive economist for IHS Global Insight. We cover 100 markets in the world, and every one fell in November. That has never happened before.
One-third of the industry was wiped out in three or four months. No one could react to that speed of collapse. But the bottom is arriving.
Globally, automotive production finally will see growth in the fourth quarter, compared with like-2008, Griffiths predicts, and expansion will continue, albeit slowly.
For the overall economy, the worst recession in six decades is about to end, although the timing will be different in regions around the world, Nariman Behravesh, the consultant's chief economist, says at a presentation to a crowd of auto executives in Paris.
In the U.S., we expect a rebound in sales in the third quarter, he says. Everyone is waiting for the U.S. to lead the world out of the recession.
Pent-up demand will drive the recovery worldwide.
In the U.S., the usual estimate for the replacement rate is 12 million-14 million units, Behravesh says, so with sales at 9 million-10 million, a potential of 2 million-5 million sales is being stocked up for the recovery. In addition, zero-interest loans have returned, raw material prices have fallen and consumer confidence is rising.
While incentives are growing, they don't make up for the loss of leases, says George Magliano, the consultant's expert on America. It will be three years before the leasing system is flushed out of cars whose value dropped radically with the hike in gasoline prices and the economic crisis, he says.
With General Motors Corp. and Chrysler Group LLC both downsizing, the U.S. landscape will change.
In 2012, Magliano says, Toyota Motor Corp. will control about 17% of the U.S. market. GM will hold 16%, Ford Motor Co. 15% and Honda Motor Co. Ltd. 13%. Chrysler's stake will fall to about 7%.
He notes IHS Global Insight is projecting a smaller market share for GM than the 18%-19% the auto maker is forecasting.
Boardroom strategies also will change, says Griffiths, because the crisis calls into question previous assumptions. Size has offered no protection during the crisis. Even prior to the recession, the biggest auto makers had lower profitability than smaller ones.
Global diversity also didn't help, because world markets all collapsed at once. Having cars in every segment proved no relief, as all sectors fell, although A-car demand declined the least, at 10%. Status as a premium maker spared no one, because upscale brands suffered more than others.
In the future, the industry will be more cautions and make fewer investments, Griffiths predicts.