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Study: 2-year U.S. car sales rebound

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Study: 2-year U.S. car sales rebound

Best-case scenario suggests record pace by 2013, report says

Christine Tierney / The Detroit News

Depending on how fast the U.S. economy recovers, auto sales may rebound in as little as two years to the annual selling pace above 16 million vehicles that preceded the industry's downturn, according to a new study.

If the economy shows unexpected vigor, U.S. auto sales could hit a record 17.8 million vehicles as early as 2013, consulting firm A.T. Kearney predicted in a report released Tuesday.

Its outlook is more optimistic than most industry forecasts, including the latest estimates from the Center for Automotive Research in Ann Arbor.

Under A.T. Kearney's best-case scenario, U.S. light vehicle sales could rise to 12.3 million this year from 10.4 million in 2009, jump to 15 million next year, 17.8 million in 2013 and 18.5 million in 2015, said A.T. Kearney partner Dan Cheng.

U.S. auto sales peaked at 17.3 million in 2000, then drifted lower before plunging last year during a global recession accompanied by a severe credit crunch.

A.T. Kearney's optimism rests on expectations that millions of American consumers will have to replace their aging vehicles soon.

"When you look at the age of the vehicle park (all the cars on American roads), it's pushing 10 years," Cheng said. That's very high, possibly the highest level since the 1940s, A.T. Kearney officials said.

Unless the U.S. economy doesn't recover, and there's a meltdown in Europe, the market should be underpinned by solid demand for vehicles, Cheng said. Most American commuters can't rely on public transport as an alternative to owning a vehicle.

But the cars on American roads are now 9.8 years old, on average, and that figure is expected to rise to 10.1 years by the end of 2010, A.T. Kearney said.

On the other hand, its weakest scenario sees auto sales recovering much more slowly, to just 14.8 million vehicles by 2015.

Cheng said this scenario envisages a weak economy or double-dip recession as well as continued low access to financing for borrowers with low credit scores.

They were shut out of the market in this recession, as car loan approval rates for subprime borrowers sank to 12 percent from 68 percent prior to the downturn.

"If they were brought back in, that would significantly boost new auto sales," said Matthew Cheng, manager of A.T. Kearney's office in Southfield.

The Center for Automotive Research sees U.S. light vehicle sales rising to 12.2 million this year, then increasing steadily to 15.3 million in 2015.

Under its most optimistic scenario, sales would rise to 16.8 million vehicles in 2015. Under the worst scenario, they would rise to just 13.7 million that year.

From The Detroit News: http://www.detnews.com/article/20100519/AUTO01/5190332/1148/auto01/Study--2-year-U.S.-car-sales-rebound#ixzz0oNV9Kb8s

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