Roaring back toward sweet 16

In recent days, several key analysts, some big dealership groups and a handful of automakers, including Mercedes-Benz and Chrysler, have upped their forecasts for 2012 and the next two years. And they all see 16 million on the horizon -- not this year, of course, but within two years. And they say single-month selling rates of 16 million are likely in 2013. Mercedes\' U.S. boss, Steve Cannon, said forecasters are \"starting to sharpen their pencils and determine, \'Heck, is this thing coming sooner than we thought?\'\" The new confidence grows out of a surprisingly strong first quarter. \"We see 16 million in a couple years,\" John Krafcik, CEO of Hyundai Motor America, said last week. Morgan Stanley\'s Adam Jonas said he \"would not rule out 17 million\" in three years. AutoNation has raised its 2012 forecast from 14 million to the mid-14 million range. \"We are clearly on the road back to 16 million,\" said CEO Mike Jackson. \"The auto fleet is older, a million new households are forming each year and new and exciting product offerings are coming at a faster pace.\" U.S. sales last touched 16 million in 2007, then dipped to 10.4 million in 2009 before rising to 12.8 million last year. In the first quarter, sales were up 13 percent, running at a selling rate of 14.5 million. In the depths of the recession, 16 million was considered a distant dream. That was the conventional wisdom in the new era of incentives restraint and closely controlled inventories. But the outlook has shifted abruptly. Speaking at the New York auto show this month, Cannon said: \"Everyone in this building is upwardly revising their guesstimates. For the first time I have heard the forecasters talking about pulling forward the 16 million market. \"If you consider 16 million and 17 million is where we have been from 2000 to 2007, we have been going below normal since then. Every time we sit with the forecasters we talk about ... when the market is going to return back to that normal level.\" Some analysts and industry leaders have dismissed the string of 16 and 17 million markets in the 2000s as an anomaly, fueled by buyer come-ons and easy credit. Paul Taylor, the National Automobile Dealers Association\'s chief economist, says optimism \"is well-placed\" but adds that \"characterizing 2000-07 as normalcy is misplaced\" because they were \"years of very easy credit and a lot of incentives for both customers and new-car dealers.\" Morgan Stanley\'s Jonas has just boosted his 2012 outlook from 14.0 million to 14.8 million. He expects 15.5 million in 2013 and 16.5 million by 2015. \"Credit and new-model launches are the key,\" he said. Jeff Schuster, senior vice president of LMC Automotive in suburban Detroit, said 16 million is \"on the horizon, we have it very close, by 2014 -- two years away.\" The looming question: Will the industry return to the old behavior, with incentives eating into automakers\' profits? Most analysts don\'t think so. \"This will be an economy that has more wealth and more consumers in the future,\" Taylor said. Schuster said that even in a growth phase it will be a pull market because there are so many aging cars and trucks. \"Vehicles just need to be replaced because they are old,\" he said. Cannon said 16 million has been \"like the mirage of the desert.\" \"It keeps getting further away as you get closer,\" he said. \"But for the first time we are now hearing them talk about moving forward that achievement.\"