NASHVILLE - Auto lenders heard some encouraging words last week from a respected Wall Street analyst: Fears of a sales slowdown this year are probably exaggerated.
On the contrary, "Detroit is in the third or fourth inning of a sales recovery," said Ronald A. Glantz, of Dean Witter Reynolds Inc.
"Things look pretty darn good right now," he added.
Mr. Glantz, who is often quoted in the financial press, was speaking to the Consumer Bankers Association's Automobile Finance Conference and Trade Show in Nashville. In a talk delivered Wednesday morning, Mr. Glantz dismissed a sales slowdown that occurred in January and February as a deviation from the trend.
Sales of cars and light trucks have risen sharply from just over 12 million in 1991 to 15.4 million last year. But auto lenders had been concerned when the January and February numbers - 14.8 million and 15 million respectively, on an annualized basis - fell below the 15.6-million- to-16.2-million range auto economists had predicted for 1995.
Mr. Glantz admitted he didn't know why those figures had dipped. "Maybe it was because weather was mild across the country and everyone's car or truck started in the morning," he joked.
But in any case, "everything I know about this industry says this is a temporary lull," he said. Mr. Glantz predicted that auto lenders could count on "another couple of years of good times," with the inevitable downturn not beginning until 1997.
One reason Mr. Glantz cited for his optimism was a belief that interest rates had peaked. He predicted the Federal Reserve Board's next move will be to reduce short-term rates, although he cautioned that this might not happen for another five or six months.
Mr. Glantz also pointed to the fact that used car prices are at an all- time high, which he said was the best predictor of the auto market in general, since it reflects the demand for personal transportation.
Unlike some other speakers at the conference, Mr. Glantz was not concerned that the recent boom in leasing will produce a glut on the used car market over the next few years. Some lenders are worried that a flood of used cars will depress prices and weaken the residual, or end-of-term, values of vehicles that come off lease at that time.
Mr. Glantz said dealers will be able to persuade their customers to lease again or to purchase something outright. "Let's say one of you has a two-year old Taurus and brings it to the dealer. How do you plan to get home?
"You're going to buy a car or truck. So there really is no evidence that leasing per se is going to cause any trouble for residuals," Mr. Glantz concluded.
Another topic covered on the conference's last day was a proposed change in regulations regarding leasing. Kurt Schumacher, a senior lawyer with the consumer affairs division of the Federal Reserve Board, said modifications to existing regulations that would strengthen consumer disclosure requirements should be ready for public comment next month.
One requirement might be an explanation in the contract of the difference between a lease and a purchase, Mr. Schumacher said.
