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Auto Sales Will Remain in Doldrums for 2010

Recovery will not come until the third quarter.

by on Oct.05, 2009

The outlook for U.S. light vehicle sales is beginning to improve, according to a R. L. Polk & Company analysis. Polk estimates new light vehicle sales in 2010 will be up 9.6% when compared to a disastrous 2009, with third quarter 2010 sales estimated to be the strongest, at an anticipated 28% of the annual total.

Polk claims the bottoming out of the housing market, a reversal in the decline of home prices, expansion in manufacturing, and improved consumer sentiment indicate positive signs that an  economic recovery is underway.

The prediction seems optimistic in the face of 10% unemployment rates, the highest in three decades as businesses continue to cut back in what is shaping up to be a jobless recovery.

Based on what Polk sees as improving economic conditions, it has increased its 2010 light vehicle sales forecast slightly to 11.2 million units from 10.8 million previously forecast.

News and Reviews!

News and Reviews!

September 2009 light vehicle sales declined to 745,000 new units when compared with robust August sales of 1.26 million units as the result of the “Cash for Clunkers” program. Once the program ended, inventories were down and showroom traffic dropped.


U.S. Senate Approves Cash for Clunkers Funding

All Republicans except four from auto states opposed the bill.

by on Jun.19, 2009

Late yesterday the U.S. Senate went along with a slimmed down version of the Cash for Clunkers bill already approved by the House of Representatives last week. The bill offers incentives of $3,500 to $4,500 to car buyers who trade in their vehicles for more fuel-efficient vehicles by this October.

The bill just squeaked through after strong lobbying by the Democratic leadership overcame unified Republican opposition.

Four Republicans — Kit Bond, Missouri, Thad Cochran, Mississippi, Susan Collins, Maine and George Voinovich, Ohio voted with 54 Democrats in favor of the clunker measure. The other two votes needed to block procedural move by the Republicans to kill it came form two independents. Ben Nelson, Democrat, Nebraska, voted against the bill, with 35 Republicans.



Sales %  over ’08

GermanyVehicle Scrappage Incentive

  • €2,500 ($3,250) per car
  • Car >9yrs old
  • Car meet Euro-4 emissions
  • Scrappage program implemented Jan. 12, ’09
  • Sales growth highest of all major mkts.
  • Total participation is expected to total 2 million vehicles, representing 60% of total ’08 sales
  • Estimated cost up to €5 billion ($6.5 billion) up from the initial est. of €1.5 billion
March (+40%)April (+19%)

May (+40%)

ChinaVehicle Scrappage & Tax Reduction Incentive

  • Up to RMB 5,000 (US$731) for cars with smaller engines
  • Scrappage incentive implemented March ’09
  • Sales jump dramatically as a result of the two incentive programs
  • RMB 5 billion (US$730 million) allocated for scrappage program
  • Tax reduction implemented January ’09
  • 50% tax reduction on cars with <=1.6 ltr. engine
February (+29%)March (+8%)

April (+25%)

FranceVehicle Scrappage Incentive

  • €1,000 ($1,300) per car
  • Car >10yrs old
  • New car meets emissions std.
  • Scrappage program implemented Dec. 4, 2008
  • Boosted sales from negative to positive
  • An estimated 30-40% of sales are linked to the scrapping incentive
  • Estimated cost €220 million (US$286 million)
 March-May (+4%)


SlovakiaCar Scrappage Incentive

  • Up to €1,500 ($1,950) per car
  • Car >10 years old
  • Price of new car <€25,000
  • Scrappage program implemented March 9, ’09. through April 14, ’09
  • Sales moved from a 43% decline in January and a 38% decline in February to an 18% increase in March and 43% increase in April
  • Estimated cost totals €52 million ($67.6 million)
March (+18%)April (+43%)


Source: Automotive Trade Policy Council

One billion dollars in taxpayer funds were provided. Scrappage vehicles eligible cannot get more than 18 mpg combined EPA rating.


Global Auto Sales Will Continue Decline in 2009

Study shows worldwide volumes won't return to pre-crisis levels until at least 2012. Growth is in Asia.

by on May.14, 2009

The chase to catch Toyota continues through 2020?

The chase to catch number one Toyota with a global share of 12% continues through 2020.

Global light vehicle sales will decline 14.7% from 2008 levels to 55.2 million units in 2009, according to R. L. Polk & Company. The study released today also predicts that the automotive markets won’t emerge from the worldwide recession until 2012, later than previously forecast, due to worsening economic conditions.

Whether this revised forecast is an accurate prediction or just more wishful thinking remains to be seen. At stake is the profitability of all the automakers in the world, and the survival of many of them, as depressed volumes continue to generate large, unsustainable losses.

Critics have maintained that automotive forecasts — and automaker’s plans derived from them — have been unrealistically high given the massive decline in global wealth brought on by the ongoing Great Recession. As just one example, the U.S. Treasury Department’s Auto Task Force rejected GM’s restructuring plan as being too optimistic in its use of industry volumes in  the U.S. in the 12.5 million unit range that Polk is now forecasting.

Polk acknowledges such criticism. It points out that its current forecast for 2009 of 55.2 million units is 23% below the 71 million vehicles that the company predicted in mid-2008, which was prior to the start of the economic crisis in fourth quarter 2008. To be fair virtually no one  foresaw the Great Recession coming. Right now it looks like global light vehicle sales through 2015 will be more than 80 million units lower than Polk predicted in mid-year 2008.

The U.S. auto market has been flattened by this ongoing economic crisis. New vehicle sales have dropped from a high of almost 17.5 million in 2000 to 13.2 million in 2008, with a further decline to 10 million projected for 2009. Polk doesn’t forecast the U.S. market reaching the 12.5 unit level until 2012. Automakers insist that “pent-up demand” is building and sales are on the verge of a turnaround, but there is no evidence in the sales data, thus far, to support this wishful thinking.    (more…)