Carmakers Keep Lid on Cautious Optimism at L.A. Auto Show
By Danny King November 19, 2010In Garrison Keillor's fictional Lake Wobegon, all the women are strong, all the men are good-looking, and all the children are above average.
Talk to executives at the Los Angeles Auto Show, which opens to the public for nine days starting tomorrow, and you might come away with the same impression.
Carmakers generally touted their market-share gains, increased popularity of their newest models and their own technology to best address the mandate of increasingly stringent fuel economy standards.
But their forecast for the broad industry's near-term prospects? Meh.
"I don't think the consumers are ready to blow the top off the champagne bottle, but we're nudging ahead," said Ken Czubay, vice president of U.S. marketing for Ford Motor Co, as the last major auto show of the year prepared to open for the public this weekend.
All In Context
Such is the effect of a North American vehicle market that, in another other context, would be a resounding disappointment. Year-to-date industry sales through October are up about 11% to about 9.5 million light-duty vehicles, and the consensus industry view is that full-year U.S. auto sales will end up at 11.5 million to 12 million units, which would mark an increase of about 13% from 2009.
Edmunds.com's forecast is for the year to finish at 11.5 million units.
That number would have been laughed off the continent from 2002 through 2007, when U.S. light-vehicle sales hammered along between 16 million and 16.9 million for six straight years and nobody could envision seeing the underside of 15 million ever again. The recession-initiated 13.2 million sales in 2008 seemed like a cataclysm until last year's total of 10.4 million, the industry's weakest performance since 1992.
Even Volvo CEO Stefan Jacoby, in his keynote speech early Wednesday, lamented recent economic conditions that helped shave his company's North American sales down to about 68,000 units last year from about 140,000 cars in 2004.
"Now, you could say that we are standing at the bottom, looking up," Jacoby told the crowd. "It means that things can only get better from now on."
Better Than The Bottom
They may be already. U.S. retail sales increased 1.2 percent during October, marking a fourth consecutive monthly increase. October's seasonally-adjusted annual rate (SAAR) of 12.2 million units, according to data from Edmunds.com, marked the second-highest monthly figure in more than two years, being surpassed only by August 2009, when sales were boosted by the Cash for Clunkers program.
And the steady increase appears to be across the board. Toyota Motor Sales USA spokesman Sam Butto said at the company is cautiously optimistic about sales prospects for the fourth quarter and 2011. He pointed out that Toyota sold more trucks than cars in October, indicating that small businesses may be starting to invest again.
On the other end of the spectrum, sportscar specialist Porsche's U.S. sales are about 30% ahead of last year's pace, indicating that the wealthier car-buying contingent that tends to be heavily invested in financial markets might again be ready to support luxury vehicle purchases. 
"It's a discretionary spending choice," said Porsche spokesman Tony Fouladpour. "Even people who have the wealth have been putting off that purchase, but that's starting to change a bit."
General Motors Co., for one, preferred to let the financial markets do the talking. The U.S. automaker, which emerged from bankruptcy last year and said last week that it had third-quarter net income of $2.2 billion after taking a year-earlier loss, got its initial public offering of shares off to a healthy, if not overly exuberant, start on Thursday, in one day ensuring the government no longer is the company's majority shareholder.
The company's position "makes (GM employees) feel like they've turned the corner," said Joel Ewanick, GM's vice president of U.S. marketing, attending the Los Angeles auto show. As for the company's outlook for the fourth-quarter and 2011, Ewanick declined to comment.
Still, GM and other companies' recent results point to a new normal of sorts, where automakers look to boost earnings without a booming economy or federal subsidies, and a projection of 12 million annual units is actually good news.
"Who would've suspected we'd be happy and making money at 12 million?" asked Ford's Czubay.
Photos
1. Ford display at the Los Angeles auto show features the upcoming 2012 Focus
2. Just to prove the recession hasn't totally squashed the industry's occasional wacky ideas, Nissan plans to sell the convertible version of the Murano crossover to "optimistic couples" (and a total of 5,000 others each year) starting in February.
3. Kia Optima Hybrid (courtesy Kia Motors America)
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