U.S. auto sales will slide for a fourth straight year in 2009, executives and analysts said in the wake of yesterdays year-end sales reports. Any signs of recovery arent expected to appear until midyear.
A 35.6 percent drop in December sales brought the 2008 U.S. sales total to 13.2 million units. That was an 18.5 percent decline from 2007s mark of 16.2 million, ending nine straight years above 16 million.
Over the past two months, sales have dipped as low as theyve been for a quarter of a century. Demand may stay there for a few more months at least.
"The first quarter is going to be bad, no matter how you look at it, Emily Kolinski Morris, Ford's senior U.S. economist, said in a call yesterday with analysts and reporters.
Ford is sticking with its forecast of 12.2 million sales this year.
Finding a new bottom
I hate to say (weve) bottomed out, because every time we say bottomed out, we find a new bottom, said Mark Fields, the automakers president of the Americas. But Im cautiously optimistic.
John Casesa, an automotive adviser with Casesa Shapiro Group LLC, said annual sales rates will stay in the range of 10 million to 12 million throughout the year. For the past two months, that seasonally adjusted figure has been about 10.4 million.
The three factors that drive auto sales are income growth, employment and consumer confidence, and all are in the dumps right now, Casesa said. Were stuck with this for many more quarters.
A year ago, forecasters were looking for 2008 sales to fall in the upper-15 million range, a mark that proved overly optimistic. Todays predictions may be too gloomy, Casesa said.
People are so pessimistic, it wouldnt be hard to be surprised on the upside, he said.
General Motors Mike DiGiovanni, executive director of industry analysis, said the automaker thinks theres some upside to the 10.5 million to 12 million light-vehicle sales GM projected in its December viability report to Congress.
As the Obama administration comes in, therell be a lot of excitement generated across the country, DiGiovanni told analysts and reporters.
Cheap gas optimism
His optimism stems from gasoline prices that may hover around $2 per gallon -- less than half their 2008 peak -- and a possible Obama administration economic stimulus package that could stem home foreclosures. DiGiovanni said he hopes for modest economic growth in the second half of 2009 and momentum from GMs six major product launches this year.
Automakers will try to lure buyers with generous discounts and other sales incentives, said Jim Farley, Fords group vice president of marketing and communications.
Farley said he expects annual sales rates in the first quarter to stay around 10.5 million units before rising.
An Obama stimulus package could prompt companies to buy pickups, said Stephen Spivey, a Frost & Sullivan analyst. But if the economy stays really bad, businesses arent going to be buying those trucks, either, he said.
Even if 2009 is dismal, the market will begin looking up, said Jesse Toprak, executive director of industry analysis at the auto information site Edmunds.com. Toprak projects auto sales of 12.4 million in 2009, increasing to 13.5 million 2010 and 14.5 million to 15 million 2011.
Its going to be another challenging year next year, Toprak said. But it seems like if we havent hit the bottom, its coming up soon.
Amy Wilson and Jamie LaReau contributed to this report