NEW YORK, NY -- (Marketwire) -- 01/09/13 -- Major automakers benefited from better sales last year and are now looking to maintain that momentum in 2013. Vehicle makers are rolling out new campaigns and vehicles to capitalize on some of the best sales conditions they have seen in years. Macroeconomic headwinds, strong competition and regulatory concerns threaten to derail some of the industry's progress but the current outlook is still positive.
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Better overall sales have been the primary driver of the industry's strong run. General Motors (NYSE: GM) saw new vehicle sales reach 2.7 million vehicles in 2012, marking a 3.7% improvement over the year prior. Automobile sales shot up 13.5% making it GM's best year since the onset of the recession. Strong sales were also evident in Ford Motor (NYSE: F) posting a 17.6% increase in year-over-year earnings per share in the third quarter. Current projections predict a 4% industrywide increase in new vehicle sales this year. Global economic slowdowns and uncertainty appear to be behind the moderate increase in sales but backed up consumer demand for new vehicles may move that figure higher.
The latest figures on consumer credit in the U.S. were encouraging for automakers though. In November, credit quality improved more-than-expected on the backing of strong demand for student and car loans. Better employment figures also bode well for an industry trying to quickly grow sales.
The New-Year has also brought new approaches to advertising for automakers looking to spur sales and increase market share. General Motors has perhaps been the most aggressive thus far. The car giant announced its first global campaign for Chevrolet and that it would also be changing its tagline from "Chevy Runs Deep" to "Find New Roads" in February. The advertising push coincides with its most aggressive rolling out of new vehicles in years. The electric and hybrid market will also see an influx of advertising dollars this year as automakers look to grow their presence in the burgeoning space. In the U.S. alone, hybrid and electric vehicle sales now comprise 4.1% of total light vehicle sales. This is nearly double what it was two years ago. Sales in this space still appear well away from plateauing, making it a particularly interesting market for car makers to focus on. Ford has been able to thrive in this market better than most of its rivals. It recently launched 'My Energi Lifestyle' technology as part of a collaborative effort with Eaton, Sunpower and Whirlpool to assist individuals and families in lowering their energy consumption and reducing their emissions. The campaign, along with healthy sales of its plug-in hybrid, could help it capture a greater share of the energy efficient market in 2013. General Motors has also made strides in the fuel efficient space, becoming the first car maker to sell 1 million units with a 30 mpg rating or better in 2012.
Increased regulatory scrutiny is the only downside to the hybrid and electric vehicle market at this time. Currently, automakers are closely tracking the recent proposal from the National Highway Traffic Safety Administration. The NHTSA proposed a new rule earlier this week that would require such vehicles to create an engine sound when travelling under 18 miles per hour because of the risks they pose to pedestrians and cyclists. Such a change would likely cost car companies in the range of $30-$35 per vehicle.
Moving forward, 2013 is shaping up to be a potentially strong year for major automakers. Companies will certainly be challenged by a slow global economic recovery, high levels of competition and a tighter regulatory environment though. However, better consumer credit, pent up demand, an improving hybrid market and new advertising campaigns appear capable of offsetting these growth obstacles and creating opportunities to substantially widen margins and improve profits.
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