What Will The New Year Bring? Less Of The Same
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
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.
Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.
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Happy New Year around the world! And thank you for letting me be part of this whacko car-nutty crew.
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.
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.
I'll take the under.