DETROIT (Jan. 13, 2009) — U.S. auto sales in 2009 should fall around 13 percent and push some auto makers closer to the verge of collapse, industry analysts said today.
Automotive forecasting firm J.D. Power and Associates expects U.S. light vehicle sales for the year to fall to around 11.4 million units, while Deutsche Bank expects sales of 11.5 million units, representatives said at a Society of Automotive Analysts roundtable today. Last year's sales dropped 18 percent to 13.2 million, their lowest mark in 16 years.
"We believe we're near the bottom or at the bottom," said Finbarr O'Neill, J.D. Power's president and a former U.S. chief of Hyundai and Mitsubishi. "The market will come back, but it won't come back to where it was before."
In the meantime, he added, "there's a lot of speculation about who's going to win and who's going to lose."
U.S. first quarter 2009 auto sales were seen ticking up to an annualized rate of 10.9 million units, from a rate of 10.2 million in the fourth quarter, the lowest in a quarter century, he said.
O'Neill said J.D. Power expects global auto sales will fall 8.2 percent in 2009.
North American sales should drop 12.3 percent, while car sales in Europe should decline 14.9 percent. Sales in South America and Asia should slide 3.9 percent and 2.6 percent, respectively, according to J.D. Power.
"Let's maintain our sense of humor folks," O'Neill told attendees. "We're going to need it."
J.D. Power expects U.S. auto sales to rise to 13.4 million units in 2010 and 14.7 million units in 2011.
The SAA event comes as the U.S. auto industry struggles through one of its worst downturns in decades, with the world's largest economy in recession and consumers unable to obtain loans to buy cars amid the continuing global credit crisis.
Plunging U.S. sales last year pushed General Motors Corp. and Chrysler L.L.C. — controlled by private equity firm Cerberus Capital Management LP — to the brink of collapse.
In December, the Bush administration approved $17.4 billion in emergency loans for GM and Chrysler. Conditions attached to that bailout include auto makers proving their long-term viability by March 31, plus obtaining fresh concessions from the UAW and from holders of their debt.
Ford Motor Co. has not sought federal loans but asked for a $9 billion credit line if economic conditions worsen.
Deutsche Bank analyst Rod Lache said at the SAA event that if GM and Ford close the wage gap with Asian rival Toyota Motor Corp. they could save $3 billion and $2.4 billion, respectively.
J.D. Power's O'Neill said the drop in U.S. auto sales to 13.2 million units in 2008 from more than 16.1 million units in 2007, plus the expected decrease this year means the industry is "one or two car companies" down in terms of volume.
"Somebody is the walking dead out there," he said.
Deutsche Bank's Lache said that the probability of an auto maker going bankrupt as the industry tries to weather the downturn is "greater than not."
"There's no guarantee that all of the auto makers are going to survive this process," he said. "There is much more systemic risk than we've ever seen."