Polk forecasts that 2012 U.S. light vehicle sales will reach 13.7 million, a 7% increase versus 2011. Other forecasting firms have weighed in with similar predictions, ranging from 13.4 million to 14 million units. What is not included in any new vehicle forecast, from any company, is a forecast of a traumatic event that would profoundly impact the industry. The reason why such an event is not included is because, by definition, such an event cannot be anticipated. But, that is not to say such an event won’t occur. Rather, based on the recent past, it would seem likely that such an event will occur. Consider the events of the past seven years:
- 2005 – Hurricane Katrina
- 2008 – Lehman Brothers bankruptcy on September 15, collapse of U.S. economy
- 2009 – Government-managed bankruptcies for GM, Chrysler
- 2010 – Industry sales plummet to 10.4 million units, down 39% from 2005, Toyota recalls over 8 million units globally, Toyota and Honda lose money globally for first time in decades
- 2011 – Earthquake and tsunami in Japan in March severely disrupt supply lines for several OEMs including Toyota and Honda, Thailand flood in fall disrupts supply lines again
In five of the past seven years (71%), an unforeseen major event has occurred that dramatically impacted the U.S. new vehicle industry. Using this brief time period as a guide, it is more likely than not that another impossible-to-predict event will occur in 2012. This event could take one of several forms, as witnessed in the past several years, including:
- A terrorist attack on the U.S. grid
- A war in the Middle East that drives up the price of oil
- An interruption in the supply of oil from the Middle East for another reason
- A collapse in the European economy and its reverberating impact on the North American economy
- Another natural disaster that cuts supply lines
These are not pleasant occurrences to contemplate, but if we don’t consider them, we gradually get lulled into a sense of complacency similar to what existed on September 10, 2011. Rather than let that happen, it would seem to make sense to plan ahead and be prepared in case an event like the ones listed above does occur. Such a plan might include scenario planning, in which an OEM and suppliers at all places in the supply chain plan for a rapid and steep rise in fuel costs, an interruption in the supply chain, a disruption in access to power, the web, or both, and other potential situations.
One might think it unlikely that we will experience such a traumatic event given all the country has done to protect itself since 9/11. But, based on what actually has occurred since 2005, the chances are actually greater than not that something will occur.
Posted by Tom Libby, Lead Analyst, North American Forecasting, Polk (02.20.2012)