By on December 31, 2008

When the clock strikes 12 tonight and the year ends, Americans will most likely have bought 13.1m light vehicles. That according to Erich Merkle of Crowe Horwath LLP, the man everybody seems to turn to when it comes to counting units.

Next year will be much worse.

The first quarter of 2009 will be an atrocity. “Merkle expects that the industry’s seasonally adjusted annual rate will be 10.5 million units, an abysmal rate that would match that of the fourth quarter of 2008,” says Automotive News (sub.)

By summer, Merkle sees the recession coming to its end. “His forecast: an annual sales rate of 11 million units in the first half, and 13.5 million to 14 million units in the second,” says Automotive News. For the coming year, Merkle reckons 12.8m units will sold in the U.S.

Detroit thinks, Merkle is an optimist.

Here are the projections of the three Detroit automakers as far as total light vehicle sales in the U.S. for 2009 go:

Chrysler: 11.1m
Ford: 12.2m
GM: 12.0m

The Japanese wouldn’t make a forecast. At least not in public.

If Merkle, Chrysler, Ford, and GM are too optimistic, if the American public continues its current general buyer’s strike, then the U.S. will suffer the ultimate humiliation: It will be dethroned as the world’s #1 auto market by …. China. China wanted to sell 10m units by the end of this year, a target they will miss. Next year, they’ll easily be above 10m.

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13 Comments on “What Will The New Year Bring? Less Of The Same...”


  • avatar
    Stu Sidoti

    I will be quite surprised if we reach even 10 Million vehicles sold here in the U.S. for 2009 especially in light of the second housing bubble coming soon-see attached link for a video from 60 Minutes’ Scott Pelley that if TRUE, will make 2009 and beyond as painful as 2008 has been.
    I believe that if things start to turn around 2-3 years from now, and if we do not have a punitive tax policy out of Washington, we could see a robust market again, but if we do not solve the world-wide credit crisis, and if Washington decides to raise taxes and implement anti-growth policies, we could be stuck with a terrible sales market for a long time. I hope the wizards of Wall Street and on Capitol Hill are paying attention-somehow I think they are but by in large their misguided ideologies will drive them to make poor decisions that will be harmful to the economy instead of helpful and of course, they will blame everyone but themselves. I think we have all seen how diligent they are at protecting our interests of late.

    http://www.cbsnews.com/stories/2008/12/12/60minutes/main4666112.shtml?source=search_story

  • avatar
    ronin

    Last year Merkle predicted 14.4 million sales for 2008:
    http://www.grbj.com/GRBJ/ArticleArchive/2007/December/December+24/Business+Journal+Report+On+WZZM+News.htm

    He was way way off. Not sure why the media thinks those predictions that were so far off in the past deserve any credibility now.

    Besides, I would really like to hear what act of magic in the middle of 2009 he expects will make the recession come to an end. More jobs? More pay? Lower car prices? Lower taxes? Lower food and medical and health and tuition and insurance costs? Rising dollar? Wait, I know, one word: Obama.

  • avatar
    TexN

    I don’t think anyone knows what the new car market will be in 2009, and it is almost beside the point. What I would like to see is real planning for a sales volume of 10.5M units so that the production schedule and expense base could be sized appropriately. Even if the budget shows a loss at those levels (which it would) at least they are minimizing their loss during this difficult market. If actual sales come in higher, they have a real shot at profitability. What I’m tired of is all of this “Well, if everyone hits the lottery and falls in love with our crappy products and Japan falls into the ocean and unemployment falls to zero, then the market will be 16M units and we’ll all make money!” Plan for the worst and adjust as you better understand what reality will be. It is significantly easier to ramp up production than to deal with the consequences of overproduction.

  • avatar
    PeteMoran

    @ Bertel

    It’s not my area, but our company thinks the low 11s will be the 2009 number, but I think we’re about to revise that down early Jan based on Dec’s number which was heavily driven on incentives. 13m would be a miracle surely, but YTD was 12,352,483 with a 747,544 unit Nov.

    There have been production slow- or shutdowns in the last quarter, and still the inventory has boosted out to 100+ days for the Bigish3. Unsold stock has risen at least a whole additional month during the last 2 quarters, so that’s 1 million units on a 13m year. It’s going to be an unprofitable start to 2009 that’s for sure.

    In 15 years I’ve never seen an accurate GM number, do they do their own forecasting??

  • avatar
    toxicroach

    I wouldn’t say he was way off. Granted, a million units is a pretty big miss, but given the kind of year the automakers have had, who could have pictured this mess in January?

  • avatar
    ronin

    More like two million. And in this industry that’s significant enough.

    Plenty of people could have pictured this mess in January- internet blogs were rife with this sort of predictions. And I would especially expect a predictor who charges money for making predictions to be able to predict at least something close to it. And if not– let’s pretend nobody could have predicted it– then what is the use exactly of a predicter?

    But the main point is not that he was inacurate- it’s that with the track record of innacuracy, why should we lend credence now?

  • avatar

    Well then …. Happy New Year from Japan! (Where it’s already 28 minutes of 2009…)

  • avatar

    Happy New Year Bertel!

    Thanks for helping to make TTAC a better, funnier and more international site.

    We couldn’t– and wouldn’t want to– do it without you.

  • avatar
    PeteMoran

    @ Bertel

    Happy New Year to you! (Why are you at the computer?) My excuse is I have a colourfully sick 2 year-old at 2:36am.

  • avatar

    Happy New Year around the world! And thank you for letting me be part of this whacko car-nutty crew.

  • avatar
    RobertSD

    I actually have December doing (relatively) well. Edmunds put it under 10M, but I have it between Oct and Nov’s SAAR – 10.4 or 10.5M. I could be completely wrong because I have no visibility into business fleets right now (rental fleets are dead, though), but Q4 should end around 10.5M. I have January just completely sucking at 9.4M SAAR (about 630,000 vehicles). It gets a little bit better in February and March, and my current Q1 is at 10.3M (2.37M industry units). I actually have velocity picking up in Q2 to well over 11M and have 10.9M for the first half. Barring a GM bankruptcy, I have H2 at around 13.5M for a grand total of 12.4-12.5M next year.

    I feel this is sort of like that oil bubble. When oil was at $120/bbl, Morgan Stanley had a report that sent the market shooting up in June that said oil could be above $200/bbl by the end of the year. Now look where we are. People always freak out. And our media goes a great job of enhancing it. The market will not be sub-10M next year without GM and Chrysler going bankrupt (which I suppose is possible, but I doubt it will happen under an Obama watch). We haven’t even hit a month of sub-10M units this year and, frankly, the worst of the financial side is baked in. There is some shake out left in employment, and I expect January to be dead, but businesses and consumers will start assessing things after the inaguration and some money will slowly start flowing again, especially given the size of the stimulus package being looked at ($750B). I agree, H2 is about right for a “recovery,” if we can call a 20% decline from 2007 a recovery.

  • avatar
    CarPerson

    2009 will see 9.325M cars and light trucks produced.

    In the recent past, General Motors has typically captured 20% of the total, meaning they could ordinarily expect 1.865M units.

    My guess is that after all mid-summer attempts fail to move the iron they will see the light and throw in the towel. About a 4-month complete shutdown will drop them well below the 20% figure.

    2010 total numbers will increase slightly.

    It will be around mid-2011 when we finally see the beginning of the return to the historic trends.

  • avatar
    Robert Schwartz

    I’ll take the under.

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