By Jesse Snyder, Crain News Service
DETROIT (Jan. 16, 2014) — Auto sales will be stronger than expected this year and next because pent-up demand isn't used up but just starting.
That's the take on the auto industry from Itay Michaeli, head of auto research for Citi Investment.
He sees U.S. light-vehicle sales of 16.4 million this year, at the top end of the range of most forecasters. But his 2015 outlook for 17 million sales is significantly higher than the pack.
His reasoning? It's not the age of vehicles on the road that creates new-vehicle demand, but the age of the vehicles being scrapped, he told the Automotive News World Congress Jan. 15.
And what he calls the scrapping cycle is about to shift into high gear.
The average age of the 241 million U.S. vehicles in operation is 11-plus years — those built in late 2002. That's in the middle of a nine-year plateau of 16 million or more U.S. auto sales, but after the peak of 17.4 million in 2000. That would suggest pent-up demand would be waning by now.