Big drop predicted for global auto sales
As U.S. and European auto markets will see further declines, J.D. Power predicts growth will slow in developing nations.
NEW YORK (CNNMoney.com) -- As the economic downturn continues to hit consumers' wallets, market analysis firm J.D. Power is predicting even bigger drops in U.S. and global auto sales than it had previously thought.
The company forecast that automakers will sell 10.8 million vehicles to retail customers, as distinct from fleet customers, in all of 2008. That will be about 2 million fewer retail sales than the industry had in 2007, for a drop of about 15.6%.
Overall light vehicle sales, including both fleet and retail, will drop by 16% to 13.6 million units, J.D. Power said. And sales are expected to drop even further in 2009. Light vehicle sales, or sales of vehicles other than heavy-duty trucks, that year are seen hitting 13.2 million units.
About two-thirds of the decline in retail sales can be attributed to customers putting off vehicle purchases. Drivers are keeping their vehicles an average of 4 months longer in 2008 than they were in 2007, the company said in a prepared statement.
"Any truly pronounced recovery appears to be more than 18 months away," Jeff Schuster, executive director of automotive forecasting for J.D. Power and Associates, said in a statement.
Credit concerns and the deteriorating value of potential trade-ins, have been keeping Americans out of the new car market, said Schuster.
"The additional decline in expected vehicle sales is a function of growing concerns around availability of credit and leasing, declines in vehicle equity and general economic stress," Schuster said.
Given the rate of economic change, the forecast could be off by as much as 200,000 units, the company said.
European sales are also projected to decline, but less than those in the U.S. J.D. Power sees European sales of 21.3 million units, a decline of 3.1%. An increase in sales in Eastern Europe would partly offset a 7.5% decline in Western European sales.
Developing auto markets are also expected to be hard-hit, J.D. Power said. The Chinese auto market will still see an increase, rising by 9.7%, the company said, but that's much less than the 24.1% increase seen in 2007.
Growth will also slow greatly in India, the company projects.
"While the global automotive industry is clearly experiencing a slowdown in 2008, the global market in 2009 may experience an outright collapse," said Schuster. "While mature markets are being impacted more severely than emerging markets, no country or region is completely immune to the turmoil."