Automakers' sales goals add up to optimistic forecast

Automotive industry analysts are projecting sales of over 14.4 million units this year, a lofty figure we originally reported late last year. Unfortunately, it seems that those paid visionaries may be an overly optimistic bunch as the actual sales figures – calculated by outside experts – are expected to be significantly lower.

American Honda expects sales growth of 25 percent over last year, while Nissan is estimating an 18-percent growth. Toyota Motor Sales, Chrysler Group and General Motors are all aiming for a 15-percent bump. All of those numbers exceed outside calculations, which say industry growth will be at about eight percent in 2012.

Industry experts at J.D. Power and Associates say many automakers have been simply too aggressive with forecasts. "There are painful decisions to be made," the company said. "Companies need to maintain discipline with realistic forecasts. The recovery is taking longer than expected. Getting too aggressive can lead to bad practices like pushing inventory." In layman's terms, production plans are based on sales goals (factories are tasked with producing enough cars to keep the showrooms stocked). If volume estimates are too high, hundreds of thousands of new cars could be sitting unsold at dealerships later this year, leading to an industry-wide incentives war.

In defense of the automakers, the optimism isn't completely unfounded. Natural disasters rocked the Japanese manufacturers last year, and they expect to use 2012 to reclaim much of their market. In addition, nearly every automaker is introducing new products in high-volume segments. Nevertheless, J.D. Power projects a 13.8 million market in 2012, followed by 15.4 million in 2013 and 16.2 million in 2014.

Share This Photo X