By on December 18, 2009

Just a few more turns and we’ll open her up. Picture courtesy etftrends.com

Come 2010, U.S. customers will storm the few remaining dealerships. GM will go public with a healthy pop that makes the taxpayer rich. The good old times will be back. The Japanese don’t think so.

The head of Japan’s auto-making lobby fears that the U.S. market will remain weak and will not reach total sales of 11mi vehicles next year, says Reuters. That and the strong Yen doesn’t bode too well for the Japanese car industry.

U.S. auto sales are expected to end with an annual sales rate of about 10.5 million units, the lowest level since the early 1980s. Led by the notorious CAR thinktank, Many are hoping, praying, and wishfully thinking that there will be at least a little blip next year. To, say, 11m to 12m units, or thereabouts. To which Japan, always with a keen eye on the U.S. market, says: “What have you been smoking?”

“I expect the U.S. market would be slightly better than this year, but there are fears that it won’t reach 11 million,” Satoshi Aoki, chairman of Honda and of the Japan Automobile Manufacturers Association (JAMA) said at a news conference.

Oh well. If all else fails, we’ll wait until the mystical 2012. Everything will be better in 2012.

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34 Comments on “Next Year’s Car Sales Will Be A Dud Again. Say The Japanese...”


  • avatar
    dwford

    I have been into cars since I was a kid back in the 80s. I can’t remember a time when we weren’t waiting for the Next Big Thing that would fix everything.

  • avatar
    Cammy Corrigan

    I agree with Peter Schiff, had we allowed the recession to play out, things would be a hell of a lot clearer and there wouldn’t be this second guessing like is happening now. But because of all these “fiscal stimuli” it’s making it harder to see where the real growth and contraction will be*.  The Japanese are right to be cautious and hopefully, that’ll be apparent in their forecasts for next year.
     
    GM’s IPO will be interesting as people are now aware of their fragility. We always forget that much of the public believe that GM’s downfall was because of the recession, not because of years of mismanagement. That information is only starting to trickle into the mainstream media (my research being BBC news). Even in the car industry, people thought TTAC were barking mad for calling GM’s bankruptcy. I think GM are going to have to have a few more months of strong growth before people will trust them with their money again.

    * = I’m only looking at this as a capitalist would. I’m still a socialist.

  • avatar
    superbadd75

    With no indication that jobless rates are going to get any better, and some say it may get worse in fact, there’s no way auto sales make a rebound in 2010. People are scared right now, unsure if they’ll be employed, and not sure they’ll even be able to afford the basics. With Congress fighting over a stupid health care bill and not actually trying to fix the job situation, no change should be expected in any segment of the economy.

    • 0 avatar
      mikey

      I got to agree with the Japanese. Car sales will improve slightly. But “superbadd75″ has it right. Everybody,even those with jobs,are scared.

      Then you got us baby boomers, either retired,or thinking about it. We used to account for a huge chunk of new car/truck sales. The idea of going out every three or four years and taking on an ever increasing lease or car payment,now that’s frightening.

  • avatar
    Lokki

    Just back from a visit with my financial advisor.  Here’s her spin on the economy next year –

    We had a dead cat bounce in 2009 because of the stimulus money. The government won’t have the cash to do it again in 2010. Additionally, businesses are being very cautious because they are expecting increased taxes for nationalized healthcare, and for some sort of carbon tax. If not now, sometime during this administration.   This nervousness for the businesses means employees feel nervous too and are going to be cautious with their spending.  Next we have the fussiness of the banks regarding consumer loans (hence Obama’s complaint about them). Finally, a lot of sales were pushed forward by the cash-for-clunkers and end-of-the-world-as-Detroit-knew-it sales.

    This does not bode well for car sales next year. 

  • avatar
    fisher72

    IMO this is the new economy. Slow and low. A big reset of a fake economy and spending for ~10 years. It will be painful for many people do deal without hyperactive economic numbers.

  • avatar
    bumpy ii

    The Japanese know from lost decades,  so maybe they’re onto something?

  • avatar
    PeteMoran

    Recovery is underway. The jobless rate is stablising, companies are making (or have made) the adjustments required to return to profit, debt spending has slowed (savings might even be occuring), a war (or two) is coming to a close and very important health-reform (to save money for all) is on the way despite obstruction.
     
    The only thing that can derail it will be if the current Chinese growth economy is a bubble/fraud and/or the price of oil shoots to $120/barrel.
     
    The necessary carbon intensity abatement spending will be re-investment in high energy efficiency and productivity into the 10-20-50 years future.

    • 0 avatar
      lw

      There can’t be a recovery without real production focused jobs.
      Government and healthcare jobs are pure overhead.  Imagine how much wealthier we would be if we needed no government and were all in perfect health.  Then everyone could produce.  Government and healthcare are required, but they drain wealth and should be minimized whenever possible.

      Notice that the USA has lost MILLIONS of jobs and yet the shelves are FULL in every store.

      The jobs lost and gone…  probably for decades…  Those with jobs aren’t having any day-to-day quality of life problems because of the unemployed, therefore the unemployed are just overhead..
      Michigan was cutting overhead by moving it’s unemployed to other states…  Mexico sent them by truckload to the USA for year.

      So what do you when you can’t dump your overhead onto someone else?
      Ask GM.. They know all about this problem and how it works out.

    • 0 avatar
      PeteMoran

      @ lw
       
      “healthcare jobs are pure overhead”
       
      These kinds of statements are symptomatic of an incomplete understanding of how population health effects the productivity of an economy. The very same stupidity that has let for-profits take over health, turn it into an industry with less-than world’s best outcomes at the highest possible cost.

    • 0 avatar
      lw

      How can health care be anything but overhead?    Almost everyone starts out life in good health and the best / most expensive care in the world can’t even get us back to the quality of health we had as small kids.
      Show me the health plan that gives me bionic implants so I can produce more/better/faster and we can talk.

    • 0 avatar
      lw

      One more thought..
      Think of health care like maintenance on a machine.  You’ll stay late on a Friday night to run numbers on a new idea to cut maintenance costs by 10%.
      But the machine never produces more, no matter how much maintenance you do, it just doesn’t produce less.
      At some point the machine gets too old and you scrap it.
      Remember the corporate line “Employees are our most valuable assets”?  Well assets depreciate and then they are scrapped.

    • 0 avatar
      PeteMoran

      @ lw
       
      In your alternate-world somehow, magically, there are no costs to business (or productivity) or socially, that are associated with letting people be unhealthy. A modern miracle!!
       
      Clearly any company paying health benefits is just wasting their money, they can just go down to the breeding factory and get “new” people after the current ones have worn out.
       
      Do people in the USA really think like this or are you just trying to frighten me?

    • 0 avatar
      Contrarian

      You’re really Robert Gibbs, aren’t you.

  • avatar
    lw

    2010 will be a bad year..  My predictions:
    1) Interest rates start to rise.  0% can’t last forever.  Try selling a Tahoe with a loan at 14%.
    2) Inflation hits the auto supply chain as the dollar weakness hits hard when contracts are renewed.
    3) $70 oil during the worst parts of the recession?  Imagine what the price of oil will be when any part of the global economy recovers.  $100-$120 / barrel will be brutal to new car sales in 2010.
    4) Prices start to rise slowly and steadily after Christmas at the remaining retailers.  This will chew up income and people will race to pay off existing cars so they can shovel that car payment money to pay for food and gas.
    I predicted that annual sales would bottom around 5M units in the USA.  I’m sticking to that.  2008/2009 was just the first leg down.

  • avatar
    stars9texashockey

    My new favorite term is “carbon intensity abatement.”  Tax to you and me

  • avatar
    Daanii2

    Why do people even bother to make predictions? They are never right, in any meaningful way. Nobody looks back to see how wrong their previous predictions were.

    We humans cannot predict the future. None of us. Best to realize that in our planning.

  • avatar
    Omoikane

    What would you say if you’d have a union knocking on your door asking for salary increases (Japan) and employees pissed-off you just took away vacation days and overtime (North America).  And you’re about to go for another round of cost-cutting in order to compete with the Koreans and with the US Government (GM and Chrysler).

    The sales numbers for December are already projected by edmunds.com to be over 11 mil. SAAR.
    SAAR 2011 will be around 12 mil- and I consider that a conservative estimate.

  • avatar
    rpol35

    Joblessness in the U.S. is not “stabilizing”! Admittedly, the rate of lay-off’s is decreasing and claims for unemployment are declining but the unemployment picture will, in aggregate, be slightly worse in 2010 than it is in 2009 and will stay above 10%. Not my prediction but a consistent one from the Fed and I don’t have a tough time believing them on this one. And this is key to getting an improvement in the purchase of major, durable goods, like cars.

    Part and parcel to this is credit availability. The time when anyone who could fog a mirror could get a car loan are done. Cheap, easy credit will not return anytime soon. This coupled with the oversupply of manufacturers does not present a pretty picture;  I believe the Japanese are correct in their less than sanguine outlook for 2010. A number above 10 MM is probably not attainable. It is not hard to imagine there will be additional auto company link-up’s/mergers in 2010 with perhaps another brand falling out or receding from U.S. shores. By the second quarter of 2011, the run-rates should improve and hopefully better days will be here then.

    • 0 avatar
      lw

      CNN showcased a new credit card (that meets the new federal credit law) and charges a mere 79.9 APR!  $20 a month in interest for every $300 charged.

    • 0 avatar
      Mark MacInnis

      rpol35 +1….you beat me to it.  If ‘stable’ means consistent half-million (give or take) a week in new jobless claims, then we’re “stable”….we ain’t even seen the big impact in State, County and city employee layoffs….but it’s comin’ as all states are wrestling with MUCH lower  revenues after robbing “rainy day” funds to sustain services throughout 2009….so that unemployment bomb has yet to go off.   Then there’s the other bomb set to go off when many small retailers pack it in after Christmas.  Then there’s the retail echo-bomb from that.  Then there’s going to be the absence of April spending on new cars due to tax refunds that  aren’t coming because of all the pay cuts people took last year…..

      Startin’ to get the idea?  

      10 million units is the ceiling for 2010.   And the incentives necessary to get it to that level mean more barrels of red ink for the OEM’s….

      PeteMoran….-1  The world sure looks wonderful, though, through a set of rose-colored lenses whilst drinkin’ the MSM koolaid….

    • 0 avatar
      lw

      +1 to Mark.
      To save us from the next leg down, we need 8-10M high paying, low skill, high benefit jobs coming online NOW.
      Every major city should be seeing 2-3 factories being built if the recovery were real.  The headlines should be all about which factories will be the best for your family.
      They have to be low skill because we don’t have enough time to train anyone on anything complicated like say a 2 year associates degree.

    • 0 avatar
      PeteMoran

      @ rpol35
       
      The US Department of Labor expects the rate of job losses to continue to slow into the early part of 2010. I’d call that stabilisation compared to what was happening.
       
      Returning company profits will indicate the bottom and we’re not far off that for many companies with all the restructuring of 2007-2009.

    • 0 avatar
      Via Nocturna

      @lw
       
      “…high paying, low skill, high benefit jobs…”
       
      Right, because what we all need is a few million more UAW workers. I hear GM’s looking for a new CEO, though, so that’s one job down.

  • avatar
    Lokki

    The necessary carbon intensity abatement spending will be re-investment in high energy efficiency and productivity into the 10-20-50 years future.

    I love this phrase.   It makes me laugh.

  • avatar
    fincar1

    We have the government doing all it can to load more costs and taxes onto small employers, the great majority of whom file individual federal income tax returns, as well as more regulations (google CPSIA for an example), and a strong attempt to make it harder for employers to resist unionization. And then they talk about how the jobs situation is really improving. Feh. The auto industry will do well to see a 10-millon year.

  • avatar
    porschespeed

    I’m always confused and amused when someone says there’s a ‘recovery’ underway.

    There is not a positive leading indicator to be found. The number of home repos will grow to about 4MM this year, the number of personal and corporate bks will continue to grow, the unemployment rate will continue to rise, the unemployed are exhausting their savings/401K/relatives, bank closings by FDIC will be much higher in 2010 than 2009, the national debt continues to grow, the overall trade deficit continues, ad infinitum, ad nauseum….

    It took aboutt 20 years of spending money we never had (and letting sleazy WS types roam free) to get us here. As an idealist I wish that the government would have let it all collapse – the entire financial system. People may have actually learned that the last 10 years have been nothing but smoke and mirrors, the system is completely corrupt, and needs to be fixed. 

    The reality of course, is that the average American would not survive for a few months while the banks imploded and restructured. I wish we could have done it, but it was highly likely that the whole societal fabric would have collapsed.

    If we’re lucky we’ll get out of this in 10 years.  

  • avatar
    tparkit

    Rather than counting units, perhaps it’s better to measure changes in the auto industry’s size by its revenue. As the recession (which is NOT over) continues to bite, buyers skew toward smaller, cheaper cars. That’s doubly true if interest rates rise, taxes increase, and “stimulus” programs like Cash for Caulkers suck dollars out of the potential customers’ car-buying account.  So, it’s possible for the total number of units sold to remain at the current level, yet for the auto industry to shrink.

    However, I expect the market to shrink in terms of units as well as revenue per unit sold.
     

  • avatar
    late_apex

    I’d guess new car sales will be about the same as this year or a little less while used car sales will go up.  Mom and pops down, flea markets and wal-mart up.  New home sales down, foreclosure sales up.  I’m all for it.  Although it’s bad for us collectively it can be good for us individually.
    Used car prices are very appealing on high-end cars right now.  At the rate it seems to be going I’ll have that 996 turbo before I know it at a price that’s 1/2 of 24 months ago.  Bought a house this year at a substantial discount.  In a good economy I couldn’t have purchased the same home and would not be thinking about another pleasure vehicle.  Just my .02-

  • avatar
    ponchoman49

    2010 will be a continuation of 2008 and 2009 but perhaps a little worse. The jobless rate will probably increase because we are more interested in fixing something that doesn’t really need fixing right now(healthcare) and lending other countries global tax dollars to help them fight fictitious Global Warming or other bridge to no where projects. If by some miracle the economy improves some expect already way over inflated $70.00/barrel oil to put further screws into auto industry recovery with 120.00-140.00 figures which will be disasterous to truck and SUV sales.
     
     
     


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