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The Auto Industry Can Benefit From Pent-Up Demand, Bloomberg Reports

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The Auto Industry Can Benefit From Pent-Up Demand, Bloomberg Reports

The U.S. auto industry has been on fire over the past six years, but not all analysts are playing the doom and gloom card.

According to a Bloomberg report, Jeff Schuster of LMC Automotive was one of the first auto experts to call for a contraction in the industry in 2016. However, he is now saying the industry could benefit from pent-up demand given a stronger labor market and improving consumer confidence, both of which helps car buyers justify their purchases.

Last year, a total of 17.5 million cars and light trucks were sold, the highest ever. Schuster estimated 17.7 million cars and light trucks would be sold this year back in July, but he then lowered his estimate to 17.4 million.

Related Link: Citi Previews September Auto Sales Data

Despite a meager 0.6 percent growth in auto sales through the first eight months of 2016, Schuster believes another record year of auto sales could be seen this year or next. Auto makers will report their September sales reports next Monday, and the sales report could confirm if 2016 is on pace for a new record year.

Analysts surveyed by Bloomberg are expecting September's auto sales to imply an annual sales rate of 17.5 million vehicles.

"Part of the reason the industry is strong is there's consumer confidence, there's low interest rates and we're continuing to make vehicles affordable for consumers that also have technology improvements and great safety improvements," Bloomberg quoted Bill Fay, head of U.S. sales for Toyota Motor Corp (ADR) (NYSE: TM)'s namesake brand as saying. "That is the primary reason we're optimistic that this industry can continue to move at a very solid rate here over the next year or two."

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