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The Beat Goes On—Or Does It?


James D. Sawyer Yearbook Editor


After running hot and heavy producing cars, truck and utility vehicles for the last six years, will the blistering pace of auto manufacturing continue, or will it fall off?


I


s the auto industry in the midst of the best of times, on the verge of bad times, or hovering somewhere in between? Under ordinary circumstances it wouldn’t be surprising to see the sales pace—and thus vehicle manufacturing—re- lax after a string of six straight years of growth, one capped off by the record-setting 17.5 million units sold in 2015. But these are not normal times. There are a plethora of issues that have to be resolved before a clear picture of the road ahead becomes apparent. For one thing, the Corporate Average Fuel Economy (CAFE) standard is slated to increase in 2017. For another, there is a presidential election this fall that is guaranteed to see a change of administration. In addition, interest rates are likely to increase at least once this year, and that often has at least a small impact on vehicle sales.


Also, fuel prices are on the rise, and changing fuel prices


can affect vehicle sales. In fact, there has been a teeter- totter type relationship between fuel prices and vehicle sales that stretches back to at least the Oil Embargo of 1973. When fuel prices are high, auto sales tend to be low, and vice-versa.


New Model Onslaught Another factor to consider: Vehicle sales increase when


there is an infl ux of new models hitting the market. John Murphy, an analyst for Bank of America Merrill Lynch, noted that automakers, using profi ts generated during those six fat years, will launch 58 new cars and trucks on average over the next four years. The historical average for new vehicle launches is 38 a year, according to the Associated Press.


11 — Motorized Vehicle Manufacturing 2016


Photo courtesy Jaguar Land Rover


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