2017 automotive forecast: "steady growth" with "some pockets of weakness"

Mar 10, 2017

Automotive assembly line
Credit flickr.com

The auto industry has experienced a great run of increased production and much improved sales since the Great Recession. What is the current state of the industry? WGVU visited Grand Valley State University’s Pew Grand Rapids Campus to find out.

“Over the last several years we’ve been on a pretty steady growth path in the U.S. and the North American market. That growth path is slowing. So we’re at more of a plateau mode now.” Mike Wall is director of Automotive Analysis for IHS Markit providing his outlook for the auto industry during the 18th West Michigan Automotive Suppliers Symposium. “It sounds like it might be negative, but it really isn’t because we’re still talking about well in excess of 17 million units being sold in the North American market and being sold in the U.S. and well in excess of 17 million being produced in the broader North American markets so it’s still very positive for suppliers but it has changed a bit, it’s more cautious optimism.”

Wall’s concern is the political uncertainty coming out of Washington D.C. where there’s talk of boarder taxes or tariffs and how it plays into the business decision making and consumer psyche. All of that is yet to play out. For now, while business is running well, there are some pockets of weakness. “Inventories at the dealership level are growing. Incentives are growing as well. It’s getting a little tougher to sell cars. So, when that happens, volatility can set in and we are watching for volatility, I think we’ll see a little bit more production volatility, and that’s where mistakes can be made at the automaker level.”

Wall says automakers are displaying discipline dialing down production where it’s needed like with compact cars that are not selling well.

Patrick Center, WGVU News.