U.S. auto sales may rise 20% on pent-up demand as recovery starts

U.S. auto sales will rise 20% in 2010, buoyed by pent-up demand and stronger credit markets, as the industry starts recovering from its worst year in almost three decades, a researcher said.

Deliveries will climb to 12.4 million from 10.3 million in 2008, the Ann Arbor-based Center for Automotive Research said Tuesday. U.S. sales were 13.2 million last year, after averaging 16.8 million this decade through 2007.

“No recession has ever been this long in terms of cumulative job loss,” Sean McAlinden, CAR’s chief economist, said at a briefing in Ypsilanti. “Will we ever see the 17 million sales levels we saw a few years ago? No, that was truly an automotive sales bubble.”

The forecast exceeded four projections by consultants and analysts for U.S. industry deliveries in a range of 11.3 million to 11.8 million light vehicles. Sales at those levels would enable General Motors and Chrysler Group to make money in the United States based on their plans to cut expenses.

Both automakers reorganized in bankruptcy this year. Chrysler has said it expects to break even in 2010 with industry sales of 11 million units and a 10% market share. In March, GM gave a target of paring expenses to the point where it could break even with industry volume at 10.5 million units.

GM and Chrysler “have done enough cost reductions to break even in North America,” McAlinden said. He said GM probably won’t reach that goal in 2010 because it still has 6,000 workers on furlough, inflating its costs.

Sales in 2010 will resume gradually, McAlinden said. “You’ll see lousy sales numbers through the spring and then it will break, but not through the roof.”

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