Forecasts of how badly the auto industry would be hurt by falling consumer confidence during

a prolonged battle against terrorists are going from bad to worse, according to USA Today.

Merrill Lynch auto analyst John Casesa called the potential effects "devastating." He said a parallel may be found in 1991 with the Gulf War coming on the heels of already fading consumer confidence. From 1986 to 1991, auto demand fell

from a peak 16 million to 12.3 million, a 23 percent drop.

If the same percentage drop happened now, auto sales would go from 17.4 million to 13.4 million, "far below Detroit's break-even point of 15 million-plus," Casesa said. Such a drop likely would mean more job losses than the Detroit automakers have already announced.

Van Bussmann, director of global forecasting at J.D. Power and Associates, said sales after the Sept. 11 terrorist attacks have been down 20 percent to 30 percent, depending on the manufacturer, from a month earlier. "We're looking for sales to be off 25 percent to around 30 percent for the month," Bussmann said.

Dealers are in a tough spot because they are already committed to shipments through the end of the year. "Those cars will be sold one way or another, that's just how this business works," said Paul Taylor, chief economist at the National Automobile Dealers Association (NADA). He anticipates more incentives to be

announced this week to get people shopping.

Taylor expects sales to gradually come back but says, "If unemployment shoots up to 6 percent, that could be bad."

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