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Inside this issue
Stable Gas Prices, Younger Buyers, Expected To Push Car Sales Higher
4 More Robust Years Forecast for Car Sales
Fuel Regs Will Stymie Industry After 2018, NADA Economist Says
Auto Sales Would Be Higher in 'Normal' Recovery, Researcher Says
GM Plans to Launch More Diesel Vehicles in U.S.
Chrysler's Second Quarter Profits Could Shrink
Center of North American Auto Industry Moves Further Southwest, IHS Says
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Top Stories
Stable Gas Prices, Younger Buyers, Expected To Push Car Sales Higher

Industry experts see stronger car and truck sales continue for a while, with a few possible reasons for concern. The year got off to a tough start, mostly because of rough weather. A warmer spring brought buyers back into showrooms, and they've pushed the annual rate over 16 million ever since. Steven Szakaly, chief economist for the National Automobile Dealers Association, sees gasoline prices remaining stable for several years. “We have significant tight oil, shale oil,” he said [Tuesday at the 2014 Management Briefing Seminars.] “These developments are very positive in the long term.” Not so positive, says Szakaly, is an unemployment rate that's fallen slower than economists would like. Some who are older, or have been out of work a long time, may see their lives changed permanently. “Many of people who were in the labor force, are not likely to come back.” That, Szakaly says, could put a chill on car sales. “As labor force declines, commuting will decline, and clearly people will not be buying as many new cars or used cars as before.” Other unknowns include the impact of car sharing, and telecommuting. Both could mean consumers need fewer new cars.
Source: WWJ Newsradio 950 (CBS Radio)
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4 More Robust Years Forecast for Car Sales

U.S. auto sales will remain healthy for the next four years, economists said Tuesday. Speaking at a panel on the second day of the Center for Automotive Research's annual Management Briefing Seminars, forecasters predicted about 17 million new cars and trucks will be sold annually in the coming years, a number that should remain consistent through 2018 as consumer confidence improves and buyers look to replace old cars. “I think today, things are going generally well,” said Itay Michaeli, director of Citi Investment Research and Analysis. “We're in a cycle that's pretty strong through 2018.”
Source: The Detroit News

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Fuel Regs Will Stymie Industry After 2018, NADA Economist Says

The federal targets for higher vehicle fuel efficiency will curb the industry's ability to sell more cars after the end of this decade, a leading economist predicts. “The challenges associated with this new CAFE standards are far underestimated and far greater than the previous CAFE regulations were,” said Steven Szakaly, chief economist for the National Automobile Dealers Association, speaking today at the 2014 Management Briefing Seminars. The industry makes good profits on large vehicles, but it will need to sell unprofitable small vehicles to meet CAFE regulations, he said. The new federal fuel economy guidelines require automakers to deliver average fleet efficiency of 54.5 mpg by 2025. That has already led to a stream of high-mpg small vehicles in the U.S. market. But many forecasters believe the American preference for larger vehicles is still alive and well. Szakaly and other economists told the seminars that industry sales will continue surging for the near future, as the industry returns to pre-crash levels. But Szakaly said that potential industry growth beyond that resurgence will be crimped because of product decisions that will be forced to meet regulations.
Source: Automotive News

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Auto Sales Would Be Higher in 'Normal' Recovery, Researcher Says

If this were a normal recovery, the auto industry should be selling a lot more cars than it is this year, says an economist. But this is no normal recovery, said Itay Michaeli, director of Citi Investment Research and Analysis. Speaking at the 2014 Management Briefing Seminars [Tuesday], Michaeli said that longer vehicle life and families making do with fewer vehicles are having a profound impact on the number of automobiles sold. The U.S. automotive sales rate for July was 16.5 million vehicles with year-to-date sales up 5 percent. “In a normal recovery, we should be at a 17.4 million,” Michaeli said.
Source: Automotive News

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GM Plans to Launch More Diesel Vehicles in U.S.

General Motors will launch more cars and light trucks with diesel engines in the United States in the coming years. Speaking at the 2014 Management Briefing Seminars, Steve Kiefer, GM's vice president of global powertrain, said diesels in cars and light trucks could grow to 10 percent of the market in the United States by 2020. GM's lone diesel car in North America, the Chevrolet Cruze, carries an EPA highway rating of 46 mpg and has met GM's sales expectations. The only other diesel GM offers in the United States is the Duramax V-8 engine, optional in heavy-duty Chevrolet and GMC pickups. The next diesel engine coming is slated for the 2016 model year, a 2.8-liter four-cylinder that will be available in the Chevrolet Colorado and GMC Canyon mid-sized pickups. But more are coming, Kiefer said.
Source: Automotive News

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Chrysler's Second Quarter Profits Could Shrink

Chrysler, the engine generating profits for the Fiat Chrysler Automobiles for three years, is expected to report a decline in second-quarter profits. Last week, CEO Sergio Marchionne said net income for the North American business of FCA fell because of the cost of launching the 2015 Chrysler 200 and higher incentives on some of Chrysler's s older models. “I think we need to become a lot more disciplined on the pricing side,” Marchionne said. About 85% of Chrysler's operating profits come from North America. Fiat reported last week that its second-quarter earnings fell 55% because new car sales fell in South America and Chrysler was less profitable.
Source: Detroit Free Press

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Center of North American Auto Industry Moves Further Southwest, IHS Says

The geographic center point of the North American auto industry, which was located in central Illinois in 2000, has now crossed south into Arkansas from Missouri and moving southwest about 14 miles a year. The calculation by consultant IHS Automotive is derived from the production data of North American assembly plants. Michael Robinet, managing director of IHS Automotive, said at the 2014 Management Briefing Seminars that the relentless move south and west best shows what is happening to automotive production in North America. Automakers are pouring investments into Mexico. Meanwhile, automakers are planning a “sobering” number of product launches -- 161 -- worldwide in 2018, the result of a proliferation of global platforms, competitive pressures on their products and rising fuel economy regulations, Robinet said. The “heavy lifting” for those new vehicles is being done now, and the efficiency demands being made on those designs are larger than at any time in the past.
Source: Automotive News
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Quotable

“The challenges associated with the new CAFE standards are far underestimated and far greater than the previous CAFE regulations were."

   
-- NADA Chief Economist Steven Szakaly, in remarks at the 2014 Management Briefing Seminars on Tuesday, Automotive News, Aug. 5

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