Industry trends, product pipelines among issues discussed at 2016 ‘Car Wars’

(DETROIT) – Industry insiders, analysts, and members of the Automotive Press Association met in Detroit Wednesday for a presentation on the industry’s financial trends and production outlooks. “Car Wars” is an annual report that focuses on how these issues relate to investment decisions and the overall financial outlook of the

automobile industry as a whole.

John Murphy, Senior Auto Analyst for Bank of America Merrill Lynch Global Research, presented this year’s report. He discussed the importance of vehicle replacement rates in driving up profits and, in turn, the price of stocks. An original equipment manufacturer (OEM) with the highest replacement rate among their vehicles generally experiences younger showroom age, as outdated models are being replaced with newer version to meet consumer demand, Murphy said. This usually results in higher market share gains for the companies with the highest replacement rates.

Murphy also touched on the overabundance of new crossover utility vehicles being introduced. He added that the convergence of product cycles is intensifying, and that suppliers and dealers should benefit from the continued product surge.

Turning to the world’s leading automakers, Murphy mentioned that GM’s product launches over the next several years should drive a strong mix, and that Ford’s product rhythm is well above average with Chrysler seeing its launches accelerating materially. Foreign automakers aren’t faring quite as well. Toyota and Nissan came in below the industry average, and Hyundai and Kia’s relatively low replacement rate has translated to lower market shares. Murphy also added that European OEMs are at risk of ceding market share because their model replacement rate is low, as well.

By Robert Benko