Investors predict 2008 auto sales could hit 15 year low

Three top investors in the automotive industry — Jerry York, an adviser to billionaire investor Kirk Kerkorian; financier Wilbur Ross; and Thomas Stallkamp, a former Chrysler president — predicted a sharp downturn in U.S. auto sales in 2008, one even predicting the lowest totals seen in over 15 years.

"While I am very negative on the autos sector over the next 12 to 18 months, I'm just not sure how bad it could be," York told Automotive News. "We all know housing is a debacle." York predicts U.S. auto sales to slip to 15.5 million units or less, representing a 3% decrease and the lowest total since 1998. Ross also predicted a similar decline.

Stallkamp, on the other hand, feels that 2008 sales could actually be much worse. "I'd say it's somewhere between 14.5 (million) and 15 (million), somewhere in there and it's hard to tell," he said. "Today, I'm a little more towards 14.5 (million)." If auto sales totaled just 14.5 million units, it would represent the lowest total since 1991 — a time when the economy was in a recession. None of the analysts predicted a recession in 2008, although York said "it feels like it's on the way."

Despite Stallkamp's gloomy outlook on 2008, he thinks the auto industry will rebound in 2009, thanks to a stabilizing credit market in mid-2008.

While this is bad news for the entire industry, it will likely impact domestic automakers the most. "You're going to see some continued retrenchment in construction and the building trades that will hit the Big Three particularly," Stallkamp said. The investors foresee domestic automakers using inventory control instead of heavy incentives to make it through the market downturn, a practice that is become more prevalent in Detroit.

Source: Investors predict 2008 auto sales could hit 15 year low

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