Edmunds.com Offers Post-Election Outlook for the U.S. Auto Industry

SANTA MONICA, Calif.--(BUSINESS WIRE)--American voters re-elected Barack Obama to four more years in the White House, but what can the auto industry expect coming out of last night's election? Edmunds.com offers two perspectives: 1) the greater economic and consumer outlook, and 2) the impact on the development of green car technology.

“The election did not change the short term outlook for auto sales. Eliminating political uncertainty reduced one small headwind against spending but the major headwinds -- threatened tax increases and spending cuts at home, businesses reluctant to hire and a weakening global economy -- still remain.”

Edmunds.com Chief Economist Dr. Lacey Plache looks at the impact on consumer confidence and behavior:

"The election did not change the short term outlook for auto sales. Eliminating political uncertainty reduced one small headwind against spending but the major headwinds -- threatened tax increases and spending cuts at home, businesses reluctant to hire and a weakening global economy -- still remain.

"The good news is that some forces in the near term expected to drive auto sales remain in play. Delayed and replacement sales from Hurricane Sandy, sales from an influx of lease terminations, and increased truck purchases due to the housing market recovery are still on the horizon. Higher consumer confidence, buoyed by wealth effects from rising home values and a solid stock market, will continue to boost sales as well.

"The key question for the medium term is how long this confidence will be maintained in the face of upcoming changes in tax rates and government spending. If the fiscal issues get resolved or if progress is being made toward a solution, decreasing uncertainty could outweigh higher tax burdens and motivate spending. But there is also a risk that lower disposable income could restrain consumers once again."

You can read more on Dr. Plache's auto industry outlook for the rest of 2012 at http://www.edmunds.com/industry-center/commentary/a-strong-finish-to-2012-auto-sales-is-becoming-easier-to-believe-in.html.

Meanwhile, Edmunds.com Green Car Analyst John O'Dell takes a look at what's next for alternative fuel vehicles in President Obama's second term:

• With voters giving Obama four more years in the White House, his Environmental Protection Agency and National Highway Traffic Safety Administration are not likely to entertain any thoughts of backing off on the new 2017-2025 Corporate Average Fuel Efficiency (CAFE) standards they just spent more than a year drafting. The standard is split into two parts - a set of formally adopted rules for the 2017-2021 period that would see average fuel economy rise to about 41 mpg; and a proposal - still to be approved - for a further increase to almost 50 mpg in the 2022-2025 period. Special credits that wold give automakers the equivalent of up to 5 mpg on average would boost the final CAFE goal to the 54.5 mpg that is most often cited in discussions about the goals. Certainly, the rules and standards that earlier this year were set through 2021 seem safe from revision now because federal law requires that new regulations be published at least 18 months before they take effect. That would mean that the 2017-2021 segment of CAFE would have to be altered before Obama's new term would expire in January 2017, and that's not likely. The proposed fuel efficiency standards for the 2022-2025 period, however, are less certain to be adopted as presently written - there's a mid-term review required before formal rules are posted and that won't happen until after the next presidential election.
• The president has never abandoned his goal of bringing electric-drive vehicles into the mainstream, and a renewed push to promote plug-in cars - hybrids and "pure" battery electrics - can be expected. That might include an effort to increase subsidies for plug-in vehicles and to change the method from tax credits to direct cash rebates or price reductions - an avenue the President championed in a speech earlier this year when he called for the present $7,500 EV tax credit to be turned into a direct $10,000 rebate.
• With Energy Secretary Stephen Chu thought to be departing early in Obama's second term, there could be a new focus under a new secretary on hydrogen fuel cell vehicles - a favored technology under the George W. Bush administration and one in which major automakers including General Motors, Ford, Toyota, Honda, Daimler and Hyundai all have considerable investment and expertise.
• The administration's support for renewable energy programs could give rise to new life for the solar energy industry, and increased availability of electricity from solar panels could help promote widespread installation of public EV charging stations, which would go a long way toward relieving potential buyers of the range limitation worries that now help depress electric vehicle sales.
• Obama has given lip service to developing alternatives to petroleum-based fuels during his first term; in this second term - if he can pry funding from Congress - and the wind-down of the war in Afghanistan might help - there could be a more aggressive push to fund some of the research and development needed to get the biofuels industry moving forward.
• Lending by the Department of Energy from the moribund Advanced Technology Vehicles Manufacturing loan program may resume. Although widely discredited by Republicans during the campaign and basically abandoned by the Obama Administration for most of 2012, the program still has upwards of $16 billion available for loans to battery, vehicle and vehicle component makers.

Anyone with follow-up questions for either Dr. Plache or Mr. O'Dell, can contact us any time at [e-mail] or 310-309-4900.

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