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Auto sales up, but may not be enough to push big growth

Keywords: Tags  automotive production, scrap metal producers, scrap metal processors, Dennis DesRosiers, John Ambrosia

The upward-bound numbers in automotive production in 2011 have given scrap metal producers and processors a reason to hope that some daylight might finally be peeking through, at least in that corner of the U.S. economy.

Auto output was on track to total more than 12 million vehicles, well in excess of 10.5 million cars and trucks sold in 2010 and a significant rebound from 2009, when fewer than 10 million vehicles were sold, according to data from the National Automobile Dealers Association. Projections from several leading analysis companies call for sales to rise still further in 2012.

That seems good for the future of automotive scrap generation and sales. However, those figures are still far below the 17-million-vehicle levels reached in the early 2000s, when the industry was riding high, credit was readily available and cars were racing out of showrooms.

Furthermore, some auto industry analysts say that despite the gains, scrap industry players should be lowering their forecasts for automotive metal needs for the next decade. “It’s hard to sign up for a new vehicle when you see the value of your house going down every year,” quoted Dennis DesRosiers, president of DesRosiers Automotive Consultants Inc., Richmond Hill, Ontario, as saying at a Michigan auto conference earlier this year.

Many consumers remain skeptical about buying a new vehicle as the economy continues to come back from the worst recession since the Great Depression of the 1930s, DesRosiers said. “(September was) a tough month and a worrisome month for the industry as the market just refuses to grow,” he said in a note concerning sales in North America, particularly Canada.

DesRosiers said he expects slower growth in the number of miles driven. He also expects the scrappage rate to go down, meaning owners will keep their vehicles longer. In all, he expects an 8.7-percent decline in auto sales in the current decade vs. the last one.

Sean McAlinden, executive vice president of research and chief economist at the Ann Arbor, Mich.-based Center for Automotive Research, agrees that sales growth will be moderate. He projects vehicle sales rising to 14.4 million units in 2013 and 14.9 million in 2014.

The latest news from the automotive industry seems to bear out that slow optimism: third-quarter auto sales were up 6 percent in the United States and 14 percent in Mexico, a growing market for U.S. automakers. Despite some pessimism among analysts, there are those who offer a different outlook. For example, aluminum die casters in the automotive sector are forecasting stronger business as automakers continue to show resilience.

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