Post by unlawflcombatnt on Dec 25, 2007 5:57:19 GMT -6
from the Chicago Tribune:
U.S. Auto sales forecast at 10-year low
By Rick Popely
December 24, 2007
"The auto industry is buckling up for what could be the roughest road it has traveled in a decade, though forecasters see economic conditions, and thus vehicle sales, becoming smoother by the end of the 2008.
And no one expects the wheels to come off the domestic automakers, which are in their best shape in years to survive a sales slump thanks to aggressive cost-cutting, plant closings and more favorable contracts with the United Auto Workers union.
"It's going to be a challenging year for just about everyone," said Joseph Barker, senior manager of North American forecasting for CSM Worldwide....
CSM predicts sales of 15.8 million cars and light trucks in the U.S. next year, down from 2007's expected total of 16 million and the lowest since 1998, when the industry sold 15.6 million. Two other forecasting firms, IRN Inc. of Grand Rapids, Mich., and Global Insight of Lexington, Mass., expect a decline to 15.5 million, 500,000 fewer than this year and off 1 million from 2006.
Consumers are wrestling with higher monthly payments from adjustable-rate mortgages, falling home prices and rising energy costs, Barker said, and many are too stretched to take on more debt.
"Right now, for a lot of people, this is not a good time to go out and buy a vehicle. You have to really want that new vehicle to make that kind of financial decision," he said.
Not only are consumers not in the mood to buy, but the Detroit-based automakers also are less inclined to pull out two crutches they have used in recent years: high incentives and dumping vehicles at little or no profit into daily rental fleets.
"The Detroit Three of just a couple of years ago would have spent incentive dollars just to maintain their market share or curb the erosion. Today, there is far less emphasis on market share and far more on profitability," Barker said, noting that all three have reduced sales to rental companies.
That change of philosophy shows in the cautious first-quarter production plans of General Motors Corp. and Ford Motor Co. GM will build 950,000 vehicles in North America, 113,000, or 11 percent, less than a year earlier, and Ford will build 685,000 vehicles, down 55,000, or 7 percent.
Privately held Chrysler LLC does not forecast production but has announced it will eliminate shifts in the first quarter at Belvidere, Ill., near Rockford, and four other North American plants to align production with demand....
No predictions from GM, Ford....
"They're going to be under a lot of pressure on profits and will still burn through cash next year. After some recent quarters in the black, they'll slip back down in the red, but I don't think it will be a tremendous amount," Merkle said.
The U.S. Big Three have reduced their operating costs and will save an estimated $1,000 per vehicle from the UAW contracts negotiated in the fall, and Merkle said they should be able to weather a storm he sees hitting the domestics hardest....
"Do I think it's going to be Armageddon? No, but it is cause for concern for us," Fields said....
industry sales are down 2.4% through November. GM is down 6%, Ford 12% and Chrysler 3.4%...."
U.S. Auto sales forecast at 10-year low
By Rick Popely
December 24, 2007
"The auto industry is buckling up for what could be the roughest road it has traveled in a decade, though forecasters see economic conditions, and thus vehicle sales, becoming smoother by the end of the 2008.
And no one expects the wheels to come off the domestic automakers, which are in their best shape in years to survive a sales slump thanks to aggressive cost-cutting, plant closings and more favorable contracts with the United Auto Workers union.
"It's going to be a challenging year for just about everyone," said Joseph Barker, senior manager of North American forecasting for CSM Worldwide....
CSM predicts sales of 15.8 million cars and light trucks in the U.S. next year, down from 2007's expected total of 16 million and the lowest since 1998, when the industry sold 15.6 million. Two other forecasting firms, IRN Inc. of Grand Rapids, Mich., and Global Insight of Lexington, Mass., expect a decline to 15.5 million, 500,000 fewer than this year and off 1 million from 2006.
Consumers are wrestling with higher monthly payments from adjustable-rate mortgages, falling home prices and rising energy costs, Barker said, and many are too stretched to take on more debt.
"Right now, for a lot of people, this is not a good time to go out and buy a vehicle. You have to really want that new vehicle to make that kind of financial decision," he said.
Not only are consumers not in the mood to buy, but the Detroit-based automakers also are less inclined to pull out two crutches they have used in recent years: high incentives and dumping vehicles at little or no profit into daily rental fleets.
"The Detroit Three of just a couple of years ago would have spent incentive dollars just to maintain their market share or curb the erosion. Today, there is far less emphasis on market share and far more on profitability," Barker said, noting that all three have reduced sales to rental companies.
That change of philosophy shows in the cautious first-quarter production plans of General Motors Corp. and Ford Motor Co. GM will build 950,000 vehicles in North America, 113,000, or 11 percent, less than a year earlier, and Ford will build 685,000 vehicles, down 55,000, or 7 percent.
Privately held Chrysler LLC does not forecast production but has announced it will eliminate shifts in the first quarter at Belvidere, Ill., near Rockford, and four other North American plants to align production with demand....
No predictions from GM, Ford....
"They're going to be under a lot of pressure on profits and will still burn through cash next year. After some recent quarters in the black, they'll slip back down in the red, but I don't think it will be a tremendous amount," Merkle said.
The U.S. Big Three have reduced their operating costs and will save an estimated $1,000 per vehicle from the UAW contracts negotiated in the fall, and Merkle said they should be able to weather a storm he sees hitting the domestics hardest....
"Do I think it's going to be Armageddon? No, but it is cause for concern for us," Fields said....
industry sales are down 2.4% through November. GM is down 6%, Ford 12% and Chrysler 3.4%...."