Auto Industry Limps into Detroit Auto Show: Hopeful to overcome historic sales declines

The world's auto industry will put on its best possible face next week at Cobo Hall in Detroit where the North American International Auto Show kicks off its 21st year as an international event. After a week of media and industry activities, the doors will open to the public for nine days beginning Saturday, Jan 17.

More than 40 makes will be among the exhibitors, with only Nissan and its Infiniti brand AWOL among the major manufacturers and Ferrari missing from the exotic ranks.

With private sector money still tight as Dick's hatband, Detroit automakers GM and Chrysler did manage to extract some $17.4bn in public loan guarantees from Washington to sustain them through a late-2008 cash-flow crunch. Despite dire predictions of loan defaults, indications of on-time repayment have surfaced and that will surely be a frontline topic of discussion in Detroit next week.

GM's original $13.4bn government loan request included funds to support its 49-percent stake in its struggling financial arm GMAC. Since then GMAC has been designated a bank holding company with the U.S. Treasury exchanging $5bn for preferred GMAC stock. GM also received an additional $1bn to invest in GMAC. That $6bn windfall is thought to be enough to shield GM from further cash flow problems.

In addition, the United Auto Workers are continuing to renegotiate contracts and expedite processes to further relieve automakers of future financial commitments.

All hinges on 2009 car sales. Most analysts are not predicting recovery anytime soon, but the financial gurus at GM and Chrysler aren't depending on an immediate economic turnaround.

Citing operational and financial policies already in place and others being implemented, GM sources have indicated the company will be able to get through 2009 if total U.S. auto sales stay above 10.5 million for the year - a 20-percent decline from 2008's depressed 13.2 million which represented an 18-percent decline from 2007.

Some industry insiders say the economic stimulus package under consideration by the incoming Obama administration will fuel enough of a second-half recovery to significantly ameliorate an inevitably rocky first quarter. It will be a close thing for GM's worst-case-scenario outlook, as some industry analysts have forecast U.S. auto sales as low as 10.3 million units for this year.

In any case, a recovery from recent trends must begin by mid-year.

Each of the last four months of 2008 saw 30-percent overall U.S. auto sales declines. As expected, December U.S. car sales were moribund:

GM - December light vehicle sales were down a combined 31pct (cars down 25pct; light trucks, 35pct) to 220,030 units. For the year, GM light vehicle sales dropped 23pct to 2.95m units.

Toyota Motor Sales USA - The second largest U.S. automaker suffered its eighth consecutive monthly sales decline, dropping an uncharacteristically large 37pct to 141,949 units. For the year, Toyota's U.S. sales were off 16pct to 2.22m units. Underlining the worldwide nature of the auto industry's malaise, Toyota reported that the company will suffer its first operating loss in 70 years. As a result, Toyota President Katsuaki Watanabe is expected to be replaced this summer by Akio Toyoda, grandson of the company's founder.

Ford - Light vehicle sales for Ford were down 32pct to 138.325 for the month. Overall in 2008, sales fell 21pct to 1.98m units. However, Ford did increase market share for the third consecutive month, putting the seal of approval on recent product line adjustments.

Chrysler - Sales for December plunged 53pct to 89,813 light vehicles. Total sales for the year were off 30pct to 1.45m units.

American Honda - December sales were down 35pct to 86,085, but the company did better than most for the year, losing 7.9pct to 1.43m light vehicles sold.

Hyundai Group - The Korean automaker suffered a 45.2pct dip in December sales to 70,555 units. The year was better with a 12.6pct sales decline to 772,482 light vehicles.

Nissan - The Japanese automaker sold 62,108 light vehicles in December, a 31pct decline. For the year, the company sold 951,350 units in the U.S., off 11pct from 2007.

BMW Group - Down 35.9pct to 33,797 units for the month; 9.7pct to 336,265 for 2008.

Volkswagen - Down 13.3pct to 29,359 in December; and a very decent 4.4pct to 328.068 for the year. Good investment for Porsche.

Daimler AG - Down 23.5pct to 27,287 for the month with an almost break-even sales decline of just 1.5pct to 253,750 units for the year.

Mazda - Sales dropped 26.8pct in December to 24,556 units with an overall decline of 10.7pct to 263,949 units for the year.

Subaru - Sales for December were off 7.7pct to 18,739 units, but the Japanese automaker was the only major manufacturer to register an increase - albeit small - in sales for 2008, up 0.3pct to 187,208 units.