HALF MOON BAY, Calif. -- Automotive sales will continue to fall in 2009, but there could be light at the end of the foggy tunnel, according to an economist from General Motors.
Most--if not all--car makers are flat on their backs, which have negative implications for chip vendors and OEMs that sell into the sector. And the prospects are gloomy: Worldwide automotive production is projected to hit 55-to-56 million units in 2009, down from 78 million units in 2008, said Ted Chu, director of global economic and industry analysis at GM (Detroit), during a presentation at the Industry Strategy Symposium (ISS) here.
Chu hinted that auto production in the U.S. could reach 10.5 million units in 2009, down from 12.5 million last year. Others projected that U.S. car production hit about 12 million units in 2008, down some 25 percent from 2007.
''The automotive industry is in a depression,'' Chu declared. ''The downturn is unprecedented.''
What will jumpstart the auto industry and consumer spending in the arena? Chu listed a few drivers:
*The replacement cycle. Every year, there are ''two million more drivers on the road,'' he said. ''The big issue is there is pent-up demand.''
*Oil prices are falling. On Monday, oil fell as much as 7.9 percent to $37.60 a barrel.
*Credit is coming back. For example, GMAC Financial Services recently received a $5 billion investment from the U.S. Treasury. Founded in 1919 as a subsidiary of General Motors, GMAC was established to provide GM dealers with the financing necessary to acquire and maintain vehicle inventories and to provide customers a means by which to finance vehicle purchases.
*Government-assisted bailouts, especially at GM. ''We appreciate the President extending a financial bridge at this most critical time for the U.S. auto industry and our nation's economy,'' according to GM in a statement last month. ''This action helps to preserve many jobs, and supports the continued operation of GM and the many suppliers, dealers and small businesses across the country that depend on us.''