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The auto industry in the US can be expected

to remain healthy through the rest of the


Because carmakers go to great lengths to keep their plans

under wraps, the annual “Car Wars” report from Bank of

America Merrill Lynch is eagerly awaited and closely perused

in the auto industry. In addition to previewing upcoming

products, the comprehensive study assesses the strengths

and weaknesses of individual producers over the next

four model years. The latest installment of “Car Wars” was

presented on 11 May by Merrill Lynch senior auto analyst

John Murphy to an Automotive Press Association audience

in Detroit.

As reported by Greg Gardner and Brent Snavely in the


Free Press

, Mr Murphy is more optimistic than his Wall Street

peers, most of whom see the North American auto market as

at or near a cyclical peak. He expects automakers, flush with

cash from rising sales, to launch some 58 new cars and trucks

annually in the US over the next four years – well above the

historical average of 38 vehicles per year.

Mr Murphy expressed confidence that the US auto industry

will be selling more than 20 million vehicles annually by

2018, eclipsing last year’s record of 17.5 million, which itself

surpassed the prior record of 17.35 million sold in 2000. He

cited, as encouraging signs, steady job growth since the

recession of 2008 and 2009, together with stronger consumer

confidence and a sharp spike in total mileage. (According to

data from the US Federal Highway Administration, Americans

drove 3.15 trillion miles last year, more than ever before, for

the largest uptick [3.5 per cent higher than in 2014] in more

than a decade. The previous record, around 3 trillion miles,

was set in 2007.)










Free Press

reporters noted that the main objective of “Car

Wars”, which Merrill Lynch introduced in 1991, is to gauge

the relative competitiveness of the automakers. The thesis

is that those able to develop and launch the freshest lineups

are likely to take market share from their rivals and, ultimately,

post higher profits.

Some specifics from this year’s “Car Wars” forecast:

By 2020, 88 per cent of General Motors sales will come

from newly launched products, slightly ahead of the 86

per cent estimate for Ford. Honda (85 per cent) and FCA (Fiat

Chrysler Automobiles), at 84 per cent, follow. At 79 per cent,

Toyota almost reaches the industry average of 81 per cent,

with Nissan close behind at 76 per cent.

Trucks, sport utility vehicles and crossovers will come in

for most of the attention over the next few years. FCA will

release what senior editor Greg Migliore of


calls “a

critical salvo” with a new Ram 1500 in 2018; new generations

of the Chevy Silverado and GMC Sierra are expected in 2019;

and a new Ford F-150 in 2020. Mr Murphy suggested that

GM might speed up the production schedule for its trucks,

prodding Ford to respond.

Given the replacement rates of Korean and European

carmakers (76 per cent and 70 per cent, respectively),

Mr Murphy believes that their “slower product cadence and

lineups,” with fewer trucks, put them in a weaker position vis-

à-vis their US rivals.

• So when will this famously cyclical industry see its next

slowdown, Mr Murphy was asked in Detroit.

The answer: “Sometime in the next three to five years.”

The ai r lanes

An acute shor tage of pilots looms

for the US airlines industry

Kate Murphy is a Texas-based commercial pilot and journalist

who writes frequently for The

New York Times

. On 16 April the

paper published her article “Plenty of Passengers, but Where

Are the Pilots?”

Ms Murphy began by noting something that goes unnoticed

among the many exasperations of air travel in the US. “The

gate agent may not tell you that’s why you’re grounded,” she

wrote. “But a dearth of qualified pilots is disrupting, reducing,

and even eliminating flights.”

She cited as evidence at least 29 communities from Modesto,

California, to Macon, Georgia, that have lost air service since

2013, together with hundreds more that had their number

of flights reduced. And airports that have not lost service

are unable to get the additional flights needed to pace local

economic development.

“We’ve had $5 billion of new industry come to our area, and the

airlines say they can’t grow us because there aren’t enough

pilots,” Mike Hainsey, executive director of Golden Triangle

Regional Airport, which serves three small cities in Mississippi,

told the



The main reason for the pilot shortage is, of course, the

surge in the number of passengers. According to the US

Department of Transportation, domestic airlines carried

a record 895.5 million passengers last year, up 5 per cent

from 2014. To meet growth over the next 18 years, Boeing

forecasts that the global industry will need more than half a

million new pilots.

Next, Ms Murphy pointed to the roughly 18,000 pilots in the

US who will age out by 2022. She calls this “a can Congress

kicked down the road in 2007” when it raised the mandatory

retirement age to 65 from 60 to delay the exit of military pilots

who moved to commercial airlines after the Vietnam War.

The bottleneck in the supply of new pilots also derives from

federal legislation passed after the 2009 crash in Buffalo, New

York, of a regional airline plane, attributed in part to errors by

the flight crew. As of 2013, all entry-level first officers (co-pilots)

on commercial carriers must now have at least 1,500 hours of

flight time – up from a previous minimum of 250 hours.