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Car sales expected to remain strong

Jeff Horwich Aug 1, 2012
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Car sales expected to remain strong

Jeff Horwich Aug 1, 2012
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Jeff Horwich: Chrysler says this morning it sold more cars this July than it has in five years. Lots more people were buying Ram pickups — the company chalks that up to more home-building activity. Volkswagen and Nissan also reported stronger U.S. sales numbers this morning.

Ford sales, on the other hand, fell in July — and the company had disappointing earnings, which we got last week. In just a few minutes, we’ll see the July sales numbers from GM.

For a quick drive through the U.S. car market, Karl Brauer is with me. He’s editor-in-chief of the website TotalCarScore.com. Good to talk with you.

Karl Brauer: Hey, great talking with you.

Horwich: So we watched this stream of numbers every day, giving us the vital signs of the U.S. economy. Lately, the auto sector seems just a little bit brighter than the others. What’s going on?

Brauer: It is brighter, and I think it’s brighter because there have been so many people driving so many of the same car for 10-plus years, that they’re ready for a replacement. I mean, the average car age is somewhere around 11 years old, which is a historic high. So people are ready to get out of their cars, even with some economic concerns looming above them.

Horwich: Are there particular cars that are getting them excited to try something new?

Brauer: I think there are. This is a hot year for cars, and not in the sense of cool, sexy cars necessarily, but really just important cars. You’re going to see all new vehicles in 2013 like the Chevy Malibu, the Honda Accord, the Ford Fusion and the Nissan Altima. And when you have this many all new, high-volume cars coming in a short time period, that alone is going to stimulate sales.

Horwich: As you said, that doesn’t sound very ‘exciting,’ these particular cars, but I gather they’re just really the bread and butter of automakers everywhere?

Brauer: Exactly. With them making up such a large percentage of total new car sales, any one of these models is going to spur a certain amount of activity.

Horwich: In terms of the corporate bottom line, though, all or most of these car companies are really international organizations. And as we saw with Ford the other day, Europe is extremely important for many of them. Isn’t that a worry?

Brauer: It is a worry, and this is a kind of double-edged sword. Everyone thinks the global market and competing on a global scale is always the way you want to go. It’s one of the reasons Chrysler actually is showing some strong growth this year, because they aren’t as dependent on Europe as Ford and GM. Ironically, of course, Chrysler’s parent company — Fiat — is based in Europe, and they’re suffering along with everyone else over there. And now, Sergio Marchionne is having to focus more on the domestic production here in this country because that’s where it’s strong, and he’s having to cut back in Europe.

Horwich: Karl Brauer with TotalCarScore.com, thanks.

Brauer: Thanks for talking with me.

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