J.D. Power: Retail Sales To Be 2 Million Lower in 2008.

Posted by: David Kiley on October 8, 2008

Las Vegas—Research firm J.D. Power and Associates [a unit of BusinessWeek parent McGraw-Hill] has revised its forecast for 2008 retail sales downward to 10.8 million units.

That number removes fleet sales to government and rental fleets from the mix. Overall, Power says sales will be at about 13.6 million in 2008, and 13.2 million in 2009.

That is a substantial downturn from 12.8 million retail sales in 2007, as well as being significantly down from the 12.3 million Power forecasted last March and the 12.6 million forecasted in January.
For perspective, it took the auto industry seven yeas, between 2000 and 2007 for retail sales to decline 2 million units—from 14.8 million to 12.8 million. The current economic meltdown has created the same slide in just one year.

J.D. Power senior vice president Gary Dilts said the current sales environment for auto companies and dealers reminds him of Sept. 12, 2001, the day after the terrorist attacks, when “business just stopped.”

Dilts, a former Chrysler sales executive, said he has spoken with Chrysler dealers, for example, who could only close half the people who applied for loans in September because of the lack of credit. “That’s not just happening at Chrysler,” said Dilts.
Power’s analysis shows the remarkable loss of revenue and profit hitting automakers as sales decline across the board and many former truck and SUV buyers shift to compact and mid-sized cars.

According to Power, the industry has lost $15.5 billion in sales from a decline in mid-sized SUVs, $15 billion from the decline in pickup trucks, wile it has only increased revenues from selling more compact cars by $5 billion and $4.3 billion from a slight increase in mid-sized cars.

U.S. industry-wide auto sales as a whole, according to Global Insight, which also issued a new forecast today, are expected to come in at 13.8 million units this year, their lowest level in 15 years, and could decline further to 13.4 million units next year. U.S. auto sales as a whole were 16.15 million units in 2007.

In mid-day trading, Ford shares were at $2.67 and GM was at $7.15.

Reader Comments

Snoz

October 8, 2008 4:47 PM

As usual JD Power's numbers are fudged because it knows who is buttering its bread. 10.8mil units is too high. 9.8mil is more consistent with financial meltdown. Because of its self-serving reporting, JD Power no longer amazes me for its special ability to skew data.

From Kiley: Huh?

daniel

October 8, 2008 9:46 PM

look at it this way: if we buy fewer cars and spend more time walking instead of driving, the cost of health care and the price of gas should both go down. Life will become affordable again!

m.r.

October 9, 2008 12:07 AM

is the glass nearly full or partly empty? still, an lot of vehicles will be sold despite the economic downturn!
and a lot will be built and serviced etc. in time, the economy will improve and greater sales will return. in the interum, better and more fuel efficient cars will be introduced.

Gumby

October 9, 2008 11:14 AM

Auto sales suffers because oil prices hasnt come down far enough... I am talking about $40 a barrel not $90 today... $90 is too high and still hurting auto sales... I dont expect any return to SUV or PickUp sales. I expect GM and Ford to convert idle SUV and PickUp plants to small cars starting now.... GM and Ford should stand ready to produce many more small cars until they come with new lineup in 2010. GM and Ford is still thinking that we will return to SUV and PickUp in some ways shortly.. No, it will not happen as more of us understand that Big Oil is no longer a reliable supplier... We cannot rely on Big Oil anymore... Toss the supply/demand ideas out the windows... We got to start rationing gasoline ourselves through massive small car convertions... permanently...

gumby

October 9, 2008 11:20 AM

Auto sales suffers because oil prices hasnt come down far enough... I am talking about $40 a barrel not $90 today... $90 is too high and still hurting auto sales... I dont expect any return to SUV or PickUp sales. I expect GM and Ford to convert idle SUV and PickUp plants to small cars starting now.... GM and Ford should stand ready to produce many more small cars until they come with new lineup in 2010. GM and Ford is still thinking that we will return to SUV and PickUp in some ways shortly.. No, it will not happen as more of us understand that Big Oil is no longer a reliable supplier... We cannot rely on Big Oil anymore... Toss the supply/demand ideas out the windows... We got to start rationing gasoline ourselves through massive small car convertions... permanently...

Observer

October 10, 2008 6:52 AM

Gas at $2.75 a gallon would spur sales across all automotive segments and promote spending in other areas. Right now the large negative drain of economic value due to high gas prices is unsustainable and this is the result.
Why the switch to cars? Another big mistake. The size of the vehicle or type is not at issue as long as the mileage is superior I would prefer to drive a truck or SUV(FORD ESCAPE 34mpg) A no compromise solution.

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