SOUTHFIELD, Mich. -

The new-vehicle market will likely hit the pre-recession norm of 16 million annual unit sales the year after next, according to a study from  the A.T. Kearney consulting firm, which is projecting 2011 new-vehicle sales will reach 13.2 million units.

Furthermore, the firm suggests that the new- and used-vehicle markets are apt to benefit from the pent-up demand that has been swelling the past four years.

Specifically, A.T. Kearney puts the pent-up demand since 2007 at 32 million units, a sum that includes both new- and used-vehicles.

Breaking it down, the firm expects that more than 9 million of those delayed sales will translate into new-vehicle sales during the next five to seven years, with 23 million translating into used sales.

That said, the new- and used-vehicle markets will be affected by financing availability, ownership costs and the aftermath of the Japanese disasters.

In compiling the forecast, A.T. Kearney considered four key variables: overall economic growth, credit availability, consumer prices and consumer confidence.

Furthermore, other factors examined were pent-up demand, the likelihood of this recent recession following the patterns of previous ones, as well as vehicle age and vehicle replacement needs.

What officials called the “wild card” is the impact of the Japanese disasters. For 2011 new-vehicle sales specifically, there is expected to be a 200,000-unit downward impact, they noted.

"Given what we know about production downtime in 2011, we see 328,000 U.S. customers of the affected brands up for grabs and more if the time to wait for a particular brand begins to extend,” explained Dan Cheng, partner and leader of A.T. Kearney’s automotive practice.

Additionally, the new-vehicle market may be affected by an effect of the recession that has been referred to as “new subprime customers.” Officials explained that this group is 15 million people strong.

A.T. Kearney projects that more than 3.5 percent of these consumers (about 530,000 shoppers, the firm said) would not be able to make new-vehicle purchases given current loan approval rates.

This translates into $3.2 billion lost, the company noted.

“Auto lenders who understand that lending has more nuance to it than a FICO score and are able to accurately size up credit risk in a lower FICO-score environment, will better avail themselves of the opportunity to help buyers finance new car purchases,” Cheng stated.

Gas Price Impact

Moving along, A.T. Kearney believes that fuel-cost hikes will remain influential on purchasing decisions, as will the soft U.S. dollar.

In fact, the company pointed out that almost three-quarters of the new small-car market’s volatility since 1996 can be attributed to up-and-down fuel costs.

How can automakers hurdle such uncertainty? Cheng suggests that OEMs should be able to adjust their production based on what size vehicles consumers are demanding.

“OEMs will have to respond rapidly to shifting customer demand,” Cheng noted. “Those that have a flexible manufacturing capability and a responsive supply base will win the day.”

A.T. Kearney also pointed out there are several other ways consumers can keep the percent of their disposable income they spend on fuel steady without going down a vehicle segment.

“Therefore the mix of purchase price, gasoline consumption, finance charges, maintenance and insurance expenses will ultimately factor toward the purchasing decision, with ramifications to the overall demand for new cars,” the consultancy shared.

What Are Takeaways for Automakers, Suppliers?

Moving along, A.T. Kearney listed what it believes to be four “imperatives” for automakers and suppliers to learn from the study.

They are listed as follows:

Proactively manage supply capacity risks

The risks that automakers have with their supply spans a broad spectrum and is comprised by such areas as financial, operational, social/reputational, natural hazard and economic risks.

A.T. Kearney discovered that automakers tend have a firm grip on what their risks are as they relate to first-tier suppliers. However, their attention was typically centered on financial and operational risks and they tended not to have an adequate understanding of risks associated with lower-tiered suppliers.

“Currently, supply-base monitoring is being delegated at each level of the supply chain, often to smaller suppliers who lack the resources to monitor risk properly,” Cheng shared.

Additionally, more than a third of the suppliers in the study believe their respective capacities were not up to what automakers needed and that suppliers pulling in less than $100 million a year in revenue had major challenges with accessing capital.

Procurement moves into the spotlight

The company stressed that: “Based on automotive industry trends, including fluctuating consumer demand, capacity constraints with lower tier suppliers and commodity price volatility, purchasing executives must learn to manage an increasing number of requirements and factors.”

The consultancy said it has found at least 64 ways to cut costs and boost value with suppliers.

Learn from competitor mistakes and systematically test internal vulnerabilities

Product quality remains on the incline, A.T. Kearney noted, but some automakers stand out from their peers at curbing problems.

“OEMs and suppliers must continuously stress-test their quality systems and learn from competitor recalls,” the company noted.

Need for advanced analytics to better anticipate consumer needs in a volatile marketplace

A.T. Kearney said that its study emphasizes how vital it is to employ advanced analytics that allow companies to gauge competitor activity, real-time demand and inventory levels. Using such tools can help companies determine product most likely to spur a sale (i.e. which vehicle is most likely to sell).