U.S. automakers and dealers face a deep and prolonged downturn with annual auto sales dropping by 3.5 million or 20 percent by the middle of 2003, according to a report published on Jan. 5.

"Demand is expected to drop by 10 percent in 2001 and another 8.5 percent in 2002, and with the chances of a hard landing (for the U.S. economy) growing, it could be worse," the report from automotive intelligence firm Autopolis said.

According to the report, sales of cars and pickup trucks are likely to drop steadily until at least the first half of 2003, bottoming out at around 14.1 million. "With sales of 17.6 million in 2000, this amounts to a fall of 20 percent," the report said.

Sales of cars and pickup trucks will inch up again in 2004 to about 14.8 million, and rally to 16 million in 2005, according to Autopolis.

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