After the Bailout: Future Prospects for the U.S. Auto Industry

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CAR’s new industry outlook provides a detailed forecast for the U.S. motor vehicle and parts manufacturing industry, including forecasts on U.S. automotive sales, production and employment. The report discusses the growth prospects of the U.S. industry including the industry’s potential for adding to the growth of the overall U.S. economy.

This CAR report reviews the “comeback” of the automotive industry over the last three years in the North American market. It begins with a financial look at the Detroit Three automakers. The study then describes the larger picture of the comeback of the entire U.S. motor vehicle and parts manufacturing industry. CAR researchers then use a series of CAR forecasts to estimate where the U.S. auto industry is heading in the next 4-5 years in terms of sales, production, and employment. Finally, the report discusses the growth prospects of the U.S. industry in the long run including the industry’s potential for adding to the growth of the overall U.S. economy.
In summary – CAR expects auto sales growth to slow to single digit percentage annual increases from its rapid growth in the last three years. Sales growth will largely be driven by record pent-up demand for new vehicles rather than by a strong performance from the U.S. economy. CAR expects automotive vehicle production to fully recover to pre-recession levels in the next two years. However, recovery in automotive employment is slowing and may not reach pre-recession levels.
A high growth rate in future U.S. automotive output does not appear probable when the usual underlying trends that influence such growth are examined. However, a set of significant innovations have been mandated by the federal government for future motor vehicles that may carry great promise for savings and other benefits not only in the automotive market but throughout the economy. Yet it remains to be seen what the long run costs of these innovations and their final acceptance by consumers will be in an auto industry and market that will see many changes in the years ahead.