J.D. Powers has revised their 2009 forecast for new car sales world-wide and it isn't pretty. They're predicting a 16% decline in the US, a 9.7% growth in China (down from a 24.1% in 2007), 5.1% growth in India (down from 16% in 2007), and 3.1% drop in Europe.
But what's more shocking is the statement inside the press release.
"While the global automotive industry is clearly experiencing a slowdown in 2008, the global market in 2009 may experience an outright collapse," said executive director of automotive forecasting for J.D. Power and Associates. "While mature markets are being impacted more severely than emerging markets, no country or region is completely immune to the turmoil."Words like collapse have a power all their own.
And dealers and auto makers don't want them out there. They are already complaining that foot traffic is down. They feel like the stories about credit being denied is being overblown. Yes, the percentage of those being approved is down, but a majority of people can still get loans.
Consumer confidence is shaky and the auto makers know it.
Auto makers stock prices are way, way, way down. Ford is trading below $3 a share, while GM is below $8. To say these companies are in trouble would be an understatement.
Will the $25 billion in loans from the government save them?
I might say this is a great time to buy stock in both companies, but I'm not going to. What about you?
Press Release below:
WESTLAKE VILLAGE, Calif., Oct. 9 /PRNewswire/ -- As the U.S.
new-vehicle retail market continues to deteriorate, new-vehicle retail
sales are projected to end 2008 at 10.8 million units, which is 2 million
units below 2007 sales, according to J.D. Power and Associates.
Approximately two-thirds of the decline in retail sales -- which are
reflective of actual consumer behavior in the new-vehicle marketplace --
can be attributed to consumers delaying vehicle purchases. On average,
consumers are keeping their vehicles 4 months longer in 2008 compared with
2007 -- up from 67 months to 71 months. The remaining one-third of the
volume decline comes from reduced leasing activity. Additionally, fleet
sales are expected to decline to 2.8 million units in 2008, which is well
below the 3.3 million unit level achieved in 2007.
"Buyers are both voluntarily and involuntarily exiting the U.S.
new-vehicle market," said Jeff Schuster, executive director of automotive
forecasting for J.D. Power and Associates. "The additional decline in
expected vehicle sales is a function of growing concerns around
availability of credit and leasing, declines in vehicle equity and general
The current turmoil and financial crisis adds risk to the 2008 forecast
of up to 200,000 units, as it is unclear how consumers will respond in the
Total U.S. Light-Vehicle(1) Market
J.D. Power and Associates forecasts total new light-vehicle sales --
which includes both retail and fleet sales -- to drop to 13.6 million units
in 2008, registering a 16 percent decline from 16.1 million units in 2007.
Market uncertainty has also led to a downward revision of the J.D.
Power and Associates 2009 U.S. light-vehicle forecast. Total new
light-vehicle sales are expected to drop to 13.2 million units in 2009,
with the retail sales market declining to 10.6 million units.
"Falling trade-in equity, fewer leasing options, credit market
restructuring and the increased migration to used vehicles are all putting
added pressure on the U.S. new-vehicle sales market in 2009," said
Schuster. "Any truly pronounced recovery appears to be more than 18 months
China Light-Vehicle Market
Slowing within China's automotive market is projected to intensify
during the fourth quarter of 2008, and will likely lead to a downward
revision for 2009. Despite the slowing, light-vehicle sales -- including
passenger vehicle and light commercial vehicle segments -- in China are
expected to reach 8.9 million units in 2008, which marks an increase of 9.7
percent from 2007. However, the projected growth rate for the China
automotive market in 2008 is less than one-half of the 24.1 percent growth
achieved in 2007.
Indian Light-Vehicle Market
The light-vehicle sales forecast has also been reduced for the India
market, down 6 percent from the original forecast of 1.9 million units to
1.8 million units for 2008. The 5.1 percent growth rate forecasted for 2008
is considerably less than the increases demonstrated in 2007 (16%) and 2006
European Light-Vehicle Market
Light-vehicle sales in Europe are expected to fall to 21.3 million
units in 2008, marking a 3.1 percent decline from sales in 2007. Within
Western Europe, sales are forecasted to decline to 15.6 million -- a
decrease of 7.5 percent from 2007. While sales in Eastern Europe are
expected to increase to 5.8 million in 2008 -- up 11.3 percent from 2007,
growth within the region is slowing considerably.
"While the global automotive industry is clearly experiencing a
slowdown in 2008, the global market in 2009 may experience an outright
collapse," said Schuster. "While mature markets are being impacted more
severely than emerging markets, no country or region is completely immune
to the turmoil."