Optimism for 2009 auto sales is fading

When 2008 began, many in the automotive industry thought that the U.S. economy would begin to improve by mid-year, and automotive sales would also begin to recover. Now, that hope has almost completely faded away and automotive sales in the United States in 2009 are likely to be just as bad as this year.

Next year, U.S. vehicles sales may drop to 14.1 million, down from a peak of 17.8 million in 2000, Daniel Cheng, an A.T. Kearney vice president, said today as he presented his firm’s 12th annual automotive study.

Rising oil prices, higher transportation costs and higher raw material prices are all hurting the automotive industry, but the industry’s biggest problem is the decline in revenue caused by the slumping automotive sales, Cheng said.

A.T. Kearney’s study includes 105 automotive manufacturers and suppliers. Over the four years, the U.S. supplier base to absorb losses of nearly $50 billion the next four years, Cheng said.

“In our best case optimistic scenario, we have operating profits fort the supply base basically falling for three years and starting to recover by 2011," Cheng said. Detroit Free Press