Automakers Reverse Sales Skid

Washington DC May 10, 2010; The AIADA newsletter reported that after one of the worst downturns in its history, the auto industry appears headed for a recovery and at least a couple years of strong profit growth.

The Wall Street Journal reports that in the past few weeks, Ford, Honda, Daimler, and Volkswagen have forecast significant profit increases for the current year. Several others, including Nissan, General Motors, and Toyota, are expected to offer upbeat outlooks and improved earnings. Behind the looming growth are rising sales and cost-cutting steps many car makers took during the downturn.

The rebounding U.S. economy and continued growth in overseas markets like China are improving the revenue picture. Many automakers now can make money even with low vehicle sales in key markets, Deutsche Bank analyst Rod Lache said.

In the U.S., the industry appears headed toward sales of about 11.5 million light vehicles in 2010, below the 16 million to 17 million earlier this decade.

Honda, Daimler, Mazda, and Mitsubishi all said they turned profitable in the quarter ended in March. Honda predicted a 27 percent increase in its 2011 fiscal year, which ends next March.