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.