Fiscal Cliff resolution good news for the automotive industry

Paul A. Eisenstein, the Detroit Bureau
The last-minute compromise that go down, the land held by the so-called fiscal Cliff is good news for the US economy and great news for the automotive industry, for as the old adage goes: If the economy caught the auto industry gets pneumonia.

The resolution in Washington worked around some key issues that must be worked out in the next few months. But apart from some later hitch, created a new crisis, most industry analysts and insiders are confident that the US car market again is finally on track after the worst downturn since the great depression.

A new study by r.l. Polk new is forecast, vehicle registrations will reach 15.3 million in the United States this year and "We see it to be in the range of 16 million by 2015," says Tom Libby, Polk lead analyst North American forecasts, TheDetroitBureau.com.

That would be a 50% reduce increase in 2013 from the underside of the car market during the downturn and an increase of 6% to 7% from the final expected sales figures for 2012 - are in the vicinity of 14.5 million reach when figures of morning by industry are reported to the end of the year.

Is so good, that may sound, the turnaround is still lagging behind previous rallies. The US car market in 2005 from 17.5 million vehicles reached an all time high, Libby - and other analysts - the industry expect a figure again to see "in the near future." You don't expect in fact only a few come anywhere near the country the next cyclical economic dip retract this record.

But few think that either questions.

"The industry is very different from 2005," explained Libby, "as even greater production capacity, which use much larger incentives forcing it manufacturer was" buoy demand and keep factories running. "We saw at that time so artificially high."

In fact Detroit makers were saddled, with so much overcapacity, even with a turnover under record, levels of profitability hardly could they claim. By the time the industry was on the 2005 tip were General Motors and Chrysler already their descent into the bankruptcies accelerated 2009, that they survived only with the help of a massive bailout.

The makers of Detroit leaning their operations through dozens of Assembly and component plants, scaling back, where whenever possible - and with the help of big concessions from union workers.

With must less excess capacity and lower operating costs, automakers not massive incentives for otherwise reluctant buyers dangle. According to TrueCar.come the average discount and other Giveback dropped significantly in the last 12 months and even more has changed from the lower years 2009 and 2010. At the same time, transaction prices - what customers actually a new vehicle pay - runs at or near all-time records.

As a result, says Libby, sales of "15 million health (and the makers) is very, see large gains and all will be very healthy."

He and other personalities of the industry to warn that things are still from the cliff could fall if Congress cannot resolve the remaining tax issues this year. Libby believes that Americans "deaf" but to the kind of attitude and power struggles, a gridlocked Congress and that means that the panicky headlines are less likely to send to prospective car buyers into the ground when compared to the political crises of the past.

Why should the expected sales figures for December – which will be released on January third - are among the best of all 2012 and provide a burst of momentum for the new year.