Automakers forecast an ‘exuberant’ 2012

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DETRIOT — In more buoyant times the wisecrack went something like this: “Add up all the automakers’ sales projections for the year and you’re looking at a market of 20 million units.”

Toting up all of the 2012 forecasts won’t get you to 20 million, but you’d be well north of 14 million — or way more than any company or analyst says total industry sales actually will be in 2012.

American Honda is aiming for a 25 percent increase this year; Nissan North America, 18 percent; and General Motors, Toyota Motor Sales and Chrysler Group all believe their brands can gain around 15 percent. All those internal targets easily outpace overall industry growth estimated to be 8 percent.

Of course, such brand-level confidence can be costly for the industry at large. Volume targets drive production plans, and if things don’t pan out the result could be an oversupply of vehicles and an ugly incentives war.

“The exuberance likely underestimates the power of Honda and Toyota when they are at full strength,” said Group 1 Automotive CEO Earl Hesterberg.

But those bold predictions also could suggest that industrywide forecasts are too conservative.

The consensus is that sales will be 13.6 million to 13.8 million this year, up from 12.8 million in 2011. But the combined internal targets of 15 automakers come to 14.4 million. And that doesn’t account for all the small brands, which push the total to about 14.5 million.

Dealership buyers reach for their cash

Dealership buyers are on the prowl. Large publicly held dealership groups have the money to buy and are looking at a larger range of targets than before — including Chrysler Group franchises, which buyers have shunned for several years.

A dearth of deals during the recession, brokers say, left a backlog of potential mergers and acquisitions waiting to happen. They say privately held large dealership groups also are shopping for stores.

Alan Haig, co-head of automotive services for Presidio Group of San Francisco, estimates the public companies spent just less than $500 million on acquisitions in 2011. That was more than twice the $214 million in 2010 — and far above a paltry $28 million in 2009.

Haig expects acquisition spending by the publics to increase at least 20 percent in 2012.

“It’s one of those rare periods,” Haig said, “where it’s a good time to be a buyer and a good time to be a seller. If you’re a seller, you’re going to get good value off of good earnings. You’re going to get a good multiple. And if you’re a buyer, this is the time to put capital to work. We’re near the bottom of the cycle. Sales are likely to increase. Interest rates are low. Margins are strong.”

Sheldon Sandler, managing partner of Bel Air Partners, a dealership brokerage in Hopewell, N.J., said, “There’s pent-up demand to sell.”

“There are more buyers than ever and the credit markets have opened up,” Sandler said.

In addition, the intangible values of dealerships, often called blue sky, have rebounded after the dark days of 2009-10, which is good news for sellers, he added.

For the full stories and more, visit autonews.com.