Automakers Waiting for a Summer Surge

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They're all increasing production.

Building more cars and trucks, gearing up for what we've been told to expect: a steady increase in auto sales.

But increasingly, there are indications we may not see a summer surge.

It could be more like a mild breeze bringing in a few more customers to showrooms.

A new study by the consulting firm AlixPartners shows some of the headwinds the automakers are facing. For example, AlixPartners found 83% of the consumers it surveyed do not plan to spend more this year on non-essential items. That combined with subdued consumer confidence has automakers and auto dealers wondering what it will take to bring more people into showrooms.

You might be reading this and saying, "Wait, aren't auto sales up this year?" The answer is yes.

But the increase in retail sales has been modest (up 13%) relative to overall sales (up 17%). The difference is because we are seeing higher fleet sales to rental car companies and commercial firms. Yes, there are flickers of hope with certain segments like pick-up trucks, but overall, there's a real question about whether we will see sales take off this summer.

When I talk with dealers, I continually hear the same thing: sales are ok, not great. And maybe we should adjust our expectations. I still think industry sales will come in between 11.5 and 12 million vehicles. That's not bad, coming off last year when the industry slumped to 10.4 million (the worst since '82).


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