At the 41st annual Automotive Fleet & Leasing Association (AFLA
) conference this week, industry analyst and host of Autoline Detroit
John McElroy told those in attendance that reduced capacity, increased
demand, and changes in the marketplace will “perfectly align” for
American automakers in the next five years.
gave a presentation at the conference entitled “The Golden Years in the
U.S. Auto Market, 2010-2015”, which outlined the positive impacts of
the economic downturn on the future of the auto industry. He believes
that a pent-up demand from harder times will create such a buyer rush
that automakers will no longer need to offer incentives to customers,
leading to higher profits along with the increased sales. McElroy
suggested that Ford would first see massive profits, followed by GM and Chrysler.
While the financial misfortune of the Big Three had a terrible
impact on their business, McElroy says that the same situation created
several positive conditions that will lead to recovery. He cited lower
labor costs, elimination of excess capacity, and lower break-even
points as indicators that the automakers will have greater success in
The market itself has also shifted, according to the presentation.
Environmental regulations have begun to force consumers away from
large trucks and SUVs toward smaller cars. Prices on these new
vehicles may rise up to $5,000 per unit to make up for the loss of
profits from fewer truck sales and the costs of new technology.
The used car market, he said, is set to experience a “boom time” in
the coming years as the number of used vehicles available declines due
to fewer trade-ins. Other factors include reduced rentals and fleet
Whether McElroy’s predictions are accurate will have to be seen over
the next few years, but an upturn for the auto industry would certainly
be a welcome change.
Photo courtesy of nDevilTV under the Creative Commons License.