MarketWatch: July auto sales likely to be dismal at best

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More gloomy sales numbers on tap for automakers

By Shawn Langlois, MarketWatch


SAN FRANCISCO (MarketWatch) -- Automakers are slated to post their July U.S. vehicle sales results Friday, with just about every industry observer from Detroit to Wall Street slashing their annual forecasts, as trucks and SUVs continue to gather dust in showrooms.

Jack Nerad, Kelly Blue Book's top market analyst, was one of many in the bearish industry camp regarding the rest of the year, but he did offer some longer-term rays of hope.

"There's really no doubt that July is going to be pretty dismal. There are plenty of vehicles that people don't want and a short supply of those that people do," he said. "But drivers seem to be acclimating to the fuel prices, especially as they come down a bit, and we're going to see better times ahead near the end of 2008 and certainly into 2009."

Standard & Poor's wasn't nearly as optimistic. The credit ratings agency on Thursday downgraded the debt of all three major U.S. automakers, pointing out that it expects annual sales to drop to 14.4 million cars and trucks.

"We believe sharply lower U.S. light-vehicle demand and the recent dramatic shift in demand away from large pickup trucks and SUVs amid higher gas prices will complicate the turnaround efforts of all three automakers," analyst Robert Schulz said.

S&P went so far as to say there's a 20% chance that auto sales will plunge to 13.6 million in 2008 and an abysmal 11.7 million in 2009, "which would present an overwhelming challenge for all three Michigan-based automakers."

J.D. Power and Associates was even more negative on the industry, at least for the remainder of the year, as it cut its outlook for 2008 U.S. new light-vehicle sales last week to 14.2 million cars and trucks from its prior target of 14.95 million.

That would mark a 12% dip from 2007 and the lowest annual level since 1993.

The consumer satisfaction research firm also predicts the worst July sales results since 1992, citing the credit crisis, high gas prices and reduced rental car business. ......(more)

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