Forecasts add a dab of caution


Surprise: Cos. will not overshoot analysts

Fay: Hoping for 16 million income

Receiving true

In 2012 and 2013, the sum of carmakers’; product sales forecasts far surpassed analysts’; predictions about the dimension of the market place. Not so in 2014.
Carmakers: sixteen.37 million*
Analysts: 16.2 to sixteen.5 million
2013 revenue: 15.58 million
*Sum of companies’; person forecasts for 2014

Related Topics

Here is a sure signal that executives feel a great deal less giddy about prospective customers for new-automobile product sales than they did a year in the past.

Include up the internal forecasts of automakers for 2014 and, theoretically, you get a total that roughly equals what analysts anticipate the all round industry to be. And that almost by no means happens.

Generally carmakers assume their very own manufacturers to outperform every person else’;s, specifically in a growing marketplace. So the sum of the companies’; expectations far exceeds predictions about the size of the complete marketplace. It’;s the outdated story: Mixed market place share forecasts come to 120 or 130 % of the market.

Effectively, not so this year. The brand-by-brand forecasts, when additional up, complete much less than sixteen.4 million units. Which is about the exact same as the consensus industrywide forecast — a indicator of scaled-back expectations and a expanding worry of bloated inventories.

Following a bullish 2013 projection — which it exceeded — Toyota Motor is dialing back to a modest 3 percent growth program.

“Our plan proper now [is to outperform], but we will reassess at a couple essential factors,” Toyota Division General Manager Bill Fay stated final week. “It really is been a minor bit of a slow commence to the year, but we’;re quite optimistic it will be a 16 million 12 months.”

Analysts’; forecasts variety as higher as sixteen.5 million, up from 15.6 million sales in 2013. LMC Automotive tasks 16.2 million Kelley Blue Guide, 16.3 million Edmunds, 16.4 million and Cars.com analyst Jesse Toprak, sixteen.5 million.

All analysts said final week they are sticking to their 2014 forecasts. Toprak said “shoppers who delayed purchases due to severe climate will start coming back to the dealerships in powerful numbers beginning this month.”

And he additional that stock buildup “will lead to sizable increases in incentive spending especially in the massive truck segment.”

But the exuberant forecasts carmakers made in the past 2 years have largely disappeared. A year ago, the sum of automakers’; forecasts for 2013 was 15.8 million, in contrast with the consensus forecast of 15.one million to 15.4 million units. Revenue came in above the most optimistic projection but nevertheless fell brief of the sum complete of personal brand projections by 207,000 units. That overcapacity showed up in enhanced incentive spending in the 4th quarter as inventories rose dramatically.

For 2012, the consensus forecast was 13.6 million to 13.8 million, but the mixed inner targets of 15 automakers came to 14.4 million.

A lot more modest expectations

  2014 projected* 2013 final % modify
General Motors 2,952,000 2,786,078 6
Ford Motor 2,544,000 2,485,236 2
Toyota Motor 2,300,000 2,236,042 3
Chrysler Group one,960,000 one,800,368 9
American Honda 1,600,000 one,525,312 5
Nissan/Infiniti 1,310,000 one,248,420 5
Hyundai 745,000 720,783 3
Kia 585,000 535,179 9
VW 407,000 407,704
Subaru 460,000 424,683 8
Mercedes-Benz 345,000 334,344 3
BMW/Mini 390,000 376,790 4
Mazda 315,000 283,947 eleven
Audi 190,000 158,061 twenty
Volvo 65,000 61,233 6
Jaguar/Land Rover 70,000 66,962 5
Other 132,000 130,994 one
Complete sixteen,370,000 15,582,136 5
*Projections are primarily based on statements by executives or dealers


Hard targets

Individuals brand forecasts are not wishful thinking they are challenging targets set by automakers, and they dictate production and stock planning. But some executives have had their fingers burned and their 2014 projections are more conservative.

Some car executives say that following the particularly slow January and February — in reality, a slow past half-year — even hitting sixteen million income in 2014 may possibly be difficult. That might suggest some paring back of corporate forecasts that have been produced late last yr.

Mike Jackson, CEO of AutoNation, says that if the marketplace does not pick up steam rapidly it will be very difficult to attain the sixteen million mark.

“We now have 6 [consecutive] months of extremely tepid industry sales increase of only 2 percent,” Jackson stated in an interview on CNBC. “We’;re either about to have numerous extremely massive breakout months or the business is not on track for 16 million units this 12 months.”

U.S. auto product sales have been flat in February, although rising showroom targeted traffic in latest weeks has fueled hope that the business will lastly break out of its 3-month, climate-crimped slump in March.

Complete income fell by just 357 units in February, or .03, percent. 5 of the 7 biggest automakers posted declines although Chrysler Group and Nissan Motor Corp. bucked the trend with double-digit increases.

Danger signal

The complete-year product sales projections of individual manufacturers came from interviews with executives and dealers. For automakers that did not give a precise quantity, estimates are primarily based on executives’; projections of percentage increases or statements about regardless of whether a brand would outperform or match the industry product sales charge or its preceding market share.

Analysts view the mixed forecasts of carmakers closely. It is a achievable danger signal. As mentioned, a yr ago, after a 2012 finish of 14.5 million units, the total of automakers’; forecasts for 2013 was 15.8 million — considerably larger than the market consensus forecast of 15.one million to 15.4 million.

Nonetheless, some automakers are a lot more buoyant than ever this year.

“I sell as a lot of as I can,” stated Reid Bigland, Chrysler’;s head of U.S. and Canadian income.

Chrysler’;s product sales ambitions for 2014 have the automaker selling just shy of 2 million automobiles in the United States this yr, up from one.8 million in 2013. That would practically double the industry’;s projected 5 % development fee in a 16.4 million yr.

Common Motors has quietly told dealers to assume 6 percent growth when all its brands are combined. That is double the industry’;s growth if it hits 16 million units.

Audi, Kia and Mazda are all targeting revenue that outpace the business simply because of larger inventories of limited goods, the introduction of new high-volume cars, or merely a demand for increased income from international headquarters. Plus, even a comparatively modest volume increase will seem as a dramatic percentage boost.

Mike Accavitti, American Honda’;s senior vice president of automobile operations, worries that irrational exuberance will trigger a return to poor routines.

“I don’;t know any executive want-ing to get into an incentive war on purpose,” he stated. “There wants to be a mind-set shift in the market, the place firms are prepared and ready to take production down, rather than jam production and incentivize. I hope we would all operate in a a lot more rational manner, but you by no means know what is going to come about.”

But even Honda may well discover that enlightened path tough to navigate. 2 weeks ago it opened an assembly plant in Celaya, Mexico, to generate 200,000 extra subcompact hatchbacks and crossovers.

Ryan Beene, Nick Bunkley, Lindsay Chappell, Mike Colias, Diana T. Kurylko, Gabe Nelson, Larry P. Vellequette and Bradford Wernle contributed to this report.

You can reach Mark Rechtin at mrechtin@crain.com. — Comply with Mark on
Twitter

Leave a Reply

Your email address will not be published. Required fields are marked *