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Trust and serenity. These are the two words that could sum up the atmosphere of the Detroit Auto Show, which opened its doors to the press Monday, January 12 and extends until 25 January. After all, many indicators are green. Car sales were up nearly 6% to reach 16.5 million units, while the sharp fall in oil prices boosts the purchasing power of consumers and inhibitions manufacturers to offer new large vehicles fuel efficient. In short, the crisis is no longer a distant memory.
For six consecutive years as the US car market is growing which is new. The absolute record of 1999 was 17.4 million, now seems ready to hand. But the pace of growth may slow from 2015. “The growth due to recovery is behind us, we will be on a relatively stable market” , says Xavier Mosquet, director of the Boston Consulting Group (BCG) in Detroit. “Builders will start being cautious about the capacity increases” , he adds. For Jacques Aschenbroich, the CEO of Valeo supplier, “it is expected that the market now follow the evolution of the GDP” . That is to say that the effect observed catch since the collapse of the crisis to an end.
The profitability of manufacturers has never been so high. It exceeds an average of 6% operating margin on sales. What is also unique is that this profitability is achieved on two markets: China and the United States now account for two-thirds of the profits for only half of the sales volume
In this context, the issue of the US market orientation is paramount. Or some shortness clues begin to appear. Thus, the credit market, the so-called loan “subprime”, that is to say, given to customers with poor credit are growing strongly. They cover 18.5% of loans for the purchase of a car against 14% a year. Before the outbreak of the financial crisis, the rate was only 14.5%. “The reason why this type of loan is being grown is not due to weak demand, but rather to excess production capacity “, says one analyst.
At the end of 2014, production capacity in the United States and Canada increased by 825,000 units plus 300 000 in Mexico, whose main market remains the United States. But if the 4×4 pickups are selling well (10% in 2010), this is not the case for sedans. The plant utilization rate which manufacture is going down significantly.
“The builders increasingly difficult to keep prices in some segments of the market” says Jean-Hugues Monier, a partner at McKinsey in New York. The rebates are becoming increasingly commonplace on sedans.
In this context, the market for large 4x4s and pickup is the tree that hides the forest. “Without them, Chrysler GM would be profitable or just “, says an analyst. All based on this segment can not be a strategy, as the US government is pushing manufacturers to reduce the fuel consumption of their models. In addition, the competition will be tougher for Americans. Nissan introduced its new Detroit-size pickup Titan and Toyota’s new Tacoma. Finally, as Mr Monier: “The automotive market is back before the rest of the economy, but the downturn could earlier. “
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