FORTUNE -- Just when automakers appeared to be gaining some much-needed momentum, they hit another wall. Weak economic conditions have prompted analysts to lower their vehicles sales forecasts for this year and next. Now, the hangover of bankruptcy, recession and the Japanese earthquake in March appears far from over.
If fears of weaker sales become reality, auto plants will produce fewer vehicles and employ fewer workers, while importers could cut shipments from Japan, Europe and South Korea. Consumers, meanwhile, will continue to try and save money in 2011 and 2012 by driving their old cars a little while longer. The seasonally-adjusted annual rate of vehicle sales fell to 12.1 million in August from a 12.2 million rate in July.
An exception to the forecast could be the supply of cars from Japan, which was disrupted by the March 11 earthquake and resulting tsunami. Japanese factories are recovering from the disaster.
In the U.S. "the jobs just aren't there," says George Magliano, senior auto economist for IHS Automotive. He's not talking about a decimated Detroit, but the current overall U.S. unemployment rate, which hovers over 9%. "People would like to buy new cars, but they're being pushed out of their homes. Economic weakness is leaching into their stock portfolios."
Magliano says the average age of a car on U.S. roads has risen above 10 years, the highest in history. The aging of the domestic fleet of about 237 million vehicles has been made possible by cars that are more durable and can be repaired more easily than in past recessions.
In other words, years of striving to improve quality are coming back to bite auto manufacturers.
Two weeks ago, IHS lowered its sales forecast for this year to 12.5 million vehicles, down from 12.7 million. In the early stage of the economic recovery, its forecast for 2011 was as high as 13.4 million vehicles, Magliano says. In the last decade U.S. sales were as high as 17 million vehicles and averaged about 16 million annually.
"It will take a while to get back to that [17 million] level,'' says Dave Cutting, senior manager of North American forecasting for J.D. Power & Associates. In the meantime, he said, sales of 15 million to 16 million vehicles will be the "new normal" for a healthy economy.
J.D. Power two weeks ago cut its 2011 vehicle sales forecast to 12.6 million, down from 12.9 million. For 2012 the company cut its forecast to 14.1 million cars and trucks from an earlier 14.7 million.
"Obviously job creation has to improve," Cutting says, "as well as the gridlock that engulfs Washington."
Rental car companies like Hertz (HTZ (Fortune 500)) and National, once owned by automakers and used as a way to distribute vehicles that later were sold to consumers as "almost new," are also operating vehicles much longer before trading for new. "My own experience is that lots of rental cars have 35,000 or 40,000 miles on the odometer," Cutting says. "They used to have only a couple thousand.",
Certain segments have outperformed the overall market, noticeably compact cars as well as crossover utility vehicles like the Chevrolet (GM (Fortune 500)) Equinox and Ford (F ( , Fortune 500)) Escape. And some Japanese vehicles, especially those from Honda (HMC ( )) and Toyota (TM ( )), have been in short supply. Large cars like the Ford Taurus and Chrysler 300 are down in sales on a year-over-year basis, partly because of high gasoline prices. Minivans like Chrysler's Town and Country and Honda's Odyssey have been disproportionately hurt as well.,
One bright spot in the U.S. market has been leasing, which is up about 2 percentage points to 20%. The availability of credit and low interest costs have spurred lease deals.
As the second-largest investment for consumers, cars are a sign of prosperity as well as a major employer and stimulant to the overall economy. Slower than expected sales, therefore, will be disappointing not only for a battered auto industry dying for a break -- but also for the strapped American consumers they're counting on.
|Venezuela's economic nightmare grows worse|
|5 alternatives to Amazon Prime|
|Could Pivotal be EMC's next big hit?|
|The real reason behind the SAT revamp|
|IBM's double dilemma|