Buckle up for a rocky '08, economists warn
Thread Starter
Administrator
Joined: May 2001
Posts: 23,226
Likes: 9
From: Upstate NY
Vehicle: 2010 Genesis 2.0T
Buckle up for a rocky '08, economists warn
DETROIT — It's going to be ugly.
Economists for the Detroit 3 and others say 2008 will be a tough year of lower industry sales, nervous customers and buyers shifting to less-profitable vehicles.
Ellen Hughes-Cromwick, chief economist for Ford Motor Co., predicted 2008 U.S. light-vehicle sales of 15.7 million, a decline of about 450,000 vehicles from 2007.
In 2007, the industry sold 16.2 million light vehicles, a 2.5 percent decline from 2006.
Hughes-Cromwick's Detroit 3 colleagues were similarly pessimistic, if less specific, last week at a meeting of the Society of Automotive Analysts held in conjunction with the Detroit auto show.
Said Ted Chu, General Motors' lead economist: "The U.S. economy is at its weakest point since 2001. We're going to have a down year."
Chu resisted a specific sales forecast but spoke in general terms of the 16 million neighborhood.
Paul Traub, senior economist for Chrysler LLC, also wouldn't get specific. He only would forecast a range of 15 million to 16 million total vehicle sales, which he said included expectations of about 450,000 medium- and heavy-duty trucks.
Subtracting those commercial vehicles leaves a 2008 light-vehicle forecast as low as 14.55 million sales — which would be a much steeper industry decline than GM or Ford has discussed publicly.
The group blamed converging economic factors for the dour outlook. Chief among them: the crisis in American home financing. Tight home credit has made many consumers cautious and has taken the wind out of new-home construction. In turn, that hobbles sales of large pickups.
"The big worrisome area is consumer attitudes," Traub said.
The economists also cited a shift in product preferences as consumers grow nervous. Fewer high-profit trucks and SUVs are selling, while more buyers are looking for small cars and crossovers.
Mike Jackson, chairman of AutoNation Inc., told the analysts he was impressed by the new vehicles at the nearby auto show, including new full-sized pickups from Ford and Chrysler. But he expressed fear that the glittery new models on the show floor would not be enough to stimulate buyers whose mortgage payments are rising or who are nervous about losing their jobs.
"I think the economy trumps the show," said the chairman of the nation's largest dealer group. "It's a little painful to say."
Jackson warned the analysts: "Product and price are not going to be able to shape the market. There is real structural weakness."
Economists for the Detroit 3 and others say 2008 will be a tough year of lower industry sales, nervous customers and buyers shifting to less-profitable vehicles.
Ellen Hughes-Cromwick, chief economist for Ford Motor Co., predicted 2008 U.S. light-vehicle sales of 15.7 million, a decline of about 450,000 vehicles from 2007.
In 2007, the industry sold 16.2 million light vehicles, a 2.5 percent decline from 2006.
Hughes-Cromwick's Detroit 3 colleagues were similarly pessimistic, if less specific, last week at a meeting of the Society of Automotive Analysts held in conjunction with the Detroit auto show.
Said Ted Chu, General Motors' lead economist: "The U.S. economy is at its weakest point since 2001. We're going to have a down year."
Chu resisted a specific sales forecast but spoke in general terms of the 16 million neighborhood.
Paul Traub, senior economist for Chrysler LLC, also wouldn't get specific. He only would forecast a range of 15 million to 16 million total vehicle sales, which he said included expectations of about 450,000 medium- and heavy-duty trucks.
Subtracting those commercial vehicles leaves a 2008 light-vehicle forecast as low as 14.55 million sales — which would be a much steeper industry decline than GM or Ford has discussed publicly.
The group blamed converging economic factors for the dour outlook. Chief among them: the crisis in American home financing. Tight home credit has made many consumers cautious and has taken the wind out of new-home construction. In turn, that hobbles sales of large pickups.
"The big worrisome area is consumer attitudes," Traub said.
The economists also cited a shift in product preferences as consumers grow nervous. Fewer high-profit trucks and SUVs are selling, while more buyers are looking for small cars and crossovers.
Mike Jackson, chairman of AutoNation Inc., told the analysts he was impressed by the new vehicles at the nearby auto show, including new full-sized pickups from Ford and Chrysler. But he expressed fear that the glittery new models on the show floor would not be enough to stimulate buyers whose mortgage payments are rising or who are nervous about losing their jobs.
"I think the economy trumps the show," said the chairman of the nation's largest dealer group. "It's a little painful to say."
Jackson warned the analysts: "Product and price are not going to be able to shape the market. There is real structural weakness."