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AutoPacific, VehicleVoice’s parent company, just released its latest sales forecast numbers for the current year and beyond. We all know by now just how bad this year’s sales have been so far. It’s so bad, in fact, that the sales slump we saw earlier this year due to skyrocketing fuel prices almost seems like a happy memory compared to the much more dire and long term problems we are now facing. Indeed, it looks like the industry’s in for a long, hard road ahead.

It’s gonna take some time to clean up this mess!

So just how bad is it? AutoPacific is forecasting that 2008 will close out at about 13.4 million units. What was it last year? It was 16.1 million units in 2007. That means that 2008 sales are off nearly 3 million units from last year. These are truly catastrophic numbers; as a result of this tremendous drop off in sales, we’ve already seen plants shut down, innumerable layoffs at both white and blue collar levels, and even nationwide dealership closings.
Unfortunately, we haven’t seen the worst of it. The US economic crisis is having a profound impact on the global economy. Of course, the US economy isn’t going to recover overnight, and a struggling economy means that fewer people are being consumers of anything, much less big-ticket items like automobiles. The ongoing credit crunch means that many of those who DO want to buy a new vehicle can’t even qualify for an auto loan. Let’s face it: we’re in a recession, and it’s a doozy.

So what does this mean for the coming years? It’s going to get worse before it gets better, and we’re not likely to see the bonanza we’ve seen in recent years for quite some time. AutoPacific predicts new vehicle sales in 2009 at about 12.6 million units. From there, the industry will begin a slow recovery, climbing to about 15 million sales by 2013. That’s still a far cry from the 16.5 to 17.3 million unit years we saw for most of this decade.
It could be argued that 15 million new vehicle sales is the natural state of equilibrium for the US market. We saw sales of around 15 million units a year for much of the ‘80s and ‘90s. This decade saw sales jump significantly. Why? Much of the reason is incentives. This decade saw not only tremendous piles of cash on the hoods of just about every volume nameplate, but the sort of wheelin’-and-dealin’ financing that got the mortgage industry into the trouble it’s in now. People bought vehicles – lots of them. Definitely more vehicles than the market was naturally willing to support.
Now the economy is crashing, consumer confidence is at near historic lows, and credit is tight for those who actually want to buy a new car. Those 17 million unit years are quickly becoming a distant memory. Now, the industry is paying for those inflated sales numbers – with interest. The ramifications will be huge. Untold thousands will lose their jobs at every level of the industry, from white collar executives to dealership mechanics.
All this is occurring as fascinating new technologies that will make automobiles more socially responsible are on the cusp of appearing on the market. Plug-in hybrids, extended range electric cars, and even hydrogen fuel cell vehicles are now much closer than they are farther. Even traditionally fueled gasoline cars are making huge strides in efficiency. Of course, all this takes tremendous amounts of money to develop…money that is increasingly non-existent. How will the industry get itself out of the dumps while simultaneously developing the technology that both upcoming regulations and increasing numbers of consumers demand?
It’s going to be some tough years ahead, no doubt.