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Ford says US car sales will rev back to pre-crisis levels

The rising sales and profitability in the US market contrasts sharply with Europe some carmakers have been reluctant to make big cuts to their production capacity.

Story highlights

  • Steady economic growth, low interest rates and a fall in fuel prices from record-high levels has helped US sales
  • Ford, which avoided bankruptcy, significantly downsized and restructured its US operations after the financial crisis
  • Ford made pre-tax profit of $4.77bn in North America in the first six months of this year

Ford has fuelled the bullish mood in the US auto industry by predicting that car sales there will reach 17 million in the next few years, as pent-up demand drives the market back to pre-recession levels.

Rising employment and consumer confidence, as the economic recovery gathers steam, will sustain a recent boom in sales, said Alan Mulally, the carmaker's president and chief executive, boosting the market to a peak not seen since 2006.

"The trend we see is the upward curve increasing to 17 million vehicles in the next few years," Mulally told the Financial Times.

"It's sustainable in the near term thanks to the pent-up demand, which is a real turbo-boost for the industry," he said, adding that a long-term sales trend would be between 15 million-17 million vehicles. "The average age of a car in the US is 11 years right now."

Steady economic growth, low interest rates and a fall in fuel prices from record-high levels has helped US sales to outpace expectations consistently this year, beating growth in many emerging markets. This has offset the gloom from large losses carmakers have suffered in Europe's slumping market.

Alec Gutierrez, senior market analyst at car information service Kelley Blue Book, said it would take at least "two to three years" before sales recovered to the 17 million annual level.

    "Certainly 17 million units is a possibility . . . provided that the economy is able to continue to recover, hopefully at a better rate than it is at present," he said.

    Wednesday's US sales figures for August showed cars were selling at a seasonally adjusted annual rate -- a figure adjusted for regular, month-to-month fluctuations -- of more than 16 million units a year for the first time since 2007. The actual total for the year is expected to be lower, however.

    Kelley Blue Book's projections are for 15.6 million-15.7 million of sales in 2013, rising to about 16.2m in 2014.

    Ford, which avoided bankruptcy, unlike Detroit rivals Chrysler and General Motors, significantly downsized and restructured its US operations after the financial crisis.

    Now leaner and fitter as it rides the sales surge, Ford made pre-tax profit of $4.77bn in North America in the first six months of this year, and has struggled to keep pace with demand for its best-selling models.

    "We resized our facilities and always kept in mind the recovery, but even then we are moving as fast as we can to increase our production to support this demand," Mulally said.

    The rising sales and profitability in the US market contrasts sharply with Europe, where despite the worst downturn in sales for two decades, some carmakers have been reluctant to make big cuts to their production capacity.

    "Sizing production to the real demand is the most important lesson carmakers learnt this recession," said Mulally. "Europe has been a lot slower to understand that. Clearly we still have overcapacity in Europe today which really should be addressed," he added.