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New Cars, Redesigns Improve Outlook for Detroit Three

August 31, 2010

SANTA BARBARA, Calif. — The latest “Residual Value Report” from DealerTrack subsidiary ALG anticipates “healthy growth” for domestic and import brands in the United States over the next two years, with new vehicles and redesigned standbys helping the Detroit Three stay competitive.

The report cited recent data from CSM Worldwide that U.S. vehicle sales as projected by the OEMs are on pace for nearly 12 million units this year. That’s an improvement from the 10.4 million units sold in 2009, enough to boost long-term expectations. Manufacturers now expect to move 13.8 million units in 2011 and 17 million by 2015.

The positive outlook bodes well for the recovery of General Motors Co. and Chrysler LLC as they emerge from federal bankruptcy and continued growth for Ford Motor Co.

“Chrysler has improved its financial performance in the first half of 2010 relative to the 2009 post-bankruptcy net loss of $3.48 billion,” ALG’s report stated. “Ford has proven to be very solid in the first half of 2010 with over $2 billion in net income each quarter. GM clipped the $1 billion net income mark in Q2 — up from $865 million in Q1.”

ALG credits the impending addition of new vehicles, such as the Chevrolet Cruze and Cadillac ATS, and relaunches of the Ford Explorer and Jeep Grand Cherokee with keeping their manufacturers in the news and on car buyers’ minds heading into the 2011 model year.

“ALG maintains that the launch of new and redesigned domestic products is positively impacting the sales and respective residual outlook,” the report stated. “... In the post-bankruptcy era, the domestics are renewing their lineups with products that are more optimally aligned with the current market demand and supply dynamics.”

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