J.D. Power's King: Business Still Volatile, But Looking Up

Thomas King, senior director of consulting and analytics at J.D. Power talked global industry auto business at J.D. Power's 2014 International Auto Roundtable. He said the industry is healthy. North America was up 7%. He said it will continue this year, with growth across all global regions.

The outlook is positive, he added, noting, "If we look 2008 to 2011, for anyone trying to succeed it was one shock after another. Fortunately the last couple of years we haven't had those. When you look below the surface you see tremendous volatility, however."

King said there will be half a million units increase, but that's half of growth last year. "Everyone will have to work extra hard to capture consumers, and growth can't be assumed." 

King said everyone will have to compete to get sales. "The bar is getting raised in terms of what everyone is delivering to consumers and what consumers expect." 

Sales of subcompact cars saw 36% growth between 2011 and 2012. But it dropped to 2% last year with only 3% for midsize cars, versus 26% in 2012. "There is tremendous volatility below the surface," he said. The level of sub-prime business is also up, though below historic levels. "And that makes it very hard for automakers to adapt in terms of production." 

How about Gen-Y, those between born between 1977 and 1994? King noted they were hit hard by recession, but as they get older, "We have seen terrific straight line growth [in their auto purchases.]" He said they bought 2.2 million vehicles in 2012, with 3.3 million projected this year. "They are very sensitive to new technology and digital. The entire industry is figuring out how to embrace it all."

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