Strengthened Car Sales for Detroit Three May Face Headwinds

Published Date : May 04, 2015

The auto makers in Detroit on account of best sales track since 2006 may want to gear up for harder times ahead. As per executives from the auto industry, the industry has been exhibiting healthy sales since its restructuring in 2009.

Going by the recent performance of the of stock auto makers such as Ford Motor Co., General Motors Co., and Fiat Chrysler Automobiles NV, investors do not have a healthy view. In the last year, in spite of cash back policies to shareholders Ford and General Motors the stock prices are behind the overall market. 

The stock prices of Fiat Chrysler dropped last week, as the chief executive of the company made conspicuous efforts for drumming up interest in a merger move with a rival company. 

Another senior executive at HIS Automotive commented, the good times of automotive sales may be over but there is still speculation for strong demand ahead. Other optimists for the automotive sales included Kurt McNeil who commented that the industry is again on the track to have best sales since 2006. As per estimates of the U.S. market, the sales of light trucks and cars will reach 17 million in 2015, which was about 10 million in 2009.

After the financial crisis of 2006, consumer confidence is gaining house prices are revving and gasoline prices are less that US$4/ gallon in almost all parts of the country. This has supported sales for the Detroit Three same as it was before the financial crisis in 2008-09.

In spite of warning signals, it is observed to be a pattern of slowed sales growth in the domestic market. The demand for sedans, small cars is seen to be dropping and revenues declined as well.