Warc Blog

Ford predicts US car sales boom

9 September 2013
NEW YORK: Automaker Ford has forecast that the US market will reach 17m sales in the next few years after auto industry data revealed new cars are being bought at a rate not seen since before the recession.

Low interest rates, rising employment and consumer confidence encouraged sales of 1.5m vehicles last month, up from 17% a year ago, taking total sales across the 16m threshold.

This trend will drive sales towards 17m, according to Ford president and chief executive Alan Mulally, in comments to the Financial Times.

"It's sustainable in the near term thanks to pent-up demand, which is a real turbo-boost for the industry," he said, pointing out that the average age of a car in the US is currently 11 years.

Nearly all major automakers reported double-digit sales growth in the world's largest vehicle market, which beat growth in many emerging markets and provided some relief from a slump in demand in Europe.

Mulally attributed Ford's growth to its programme of resizing its facilities and doing all it could to increase production to meet demand – a lesson, he said, that Europe has been a lot slower to understand.

He said: "Sizing production to the real demand is the most important lesson carmakers learnt this recession…clearly we still have overcapacity in Europe today which really should be addressed."

However, the US car market remains a highly distinctive one, which poses a dilemma for foreign carmakers who have to balance US demand for larger vehicles with the efficiencies gained from designing smaller cars for the rest of the world.

The compromise solution that appears to be working for some foreign manufacturers is to concentrate on the high-end luxury market and also on retro-styled compact cars, such as the Volkswagen Beetle and BMW's Mini.

"Our buyers are, in part, buying a car that has European characteristics," explained Paul Ferraiolo, a senior manager for BMW of North America. "That's a big part of our brand and the brand appeal," he added.

Data sourced from Financial Times; additional content by Warc staff

 
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