Adjustments to Output: Down - For Now - Auto by the Numbers - Statistical Data Included

Automotive Design & Production,  Dec, 2001  by Michael Robinet

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Challenges are abound in today's global automotive industry. The combination of a tired consumer, slowing economic activity and the events of September 11th outline a contentious sales environment going forward. Forecasting during wartime is fraught with difficulties, as history provides little guidance on the coming events or market reaction to the same.

CSM Worldwide's recent forecast update accounts for anticipated reactions to inventory accumulation and a slower sales pace. Within NAFTA, we have adjusted our overall setting downwards to 15.34 million units, a decline of 380,000 units from our previous forecast. Ford accounts for 85% of the production correction, with the balance tallying from DaimlerChrysler. On the heels of the extreme 0%, 36-month incentive activity that commenced in mid-September, GM has been able to bolster demand throughout the lineup with better year-over-year performances thanks to the truck sector. New Domestic production remains strong as consumers gravitate to products offering greater residual value and satisfaction.

Behind the forecast is a story of mix-not necessarily volume. As noted, Ford is slated to correct passenger car volumes in almost every area. The most acute reductions are expected for C170 (Focus), D186 (Taurus/Sable) and the launch-plagued DEW98 (Lincoln LS and Thunderbird). The heart of Ford's truck sector is facing a myriad of issues, including fallout from the tire recall, launch and product replacement delays, and aging designs. Reflective of this demand decay is UN93/173 (Expedition/Navigator), WIN126 (Windstar) and P150/151 (Ranger). Year-over-year declines are over 25% for each platform. Far below expectations is the U152 (Explorer/Mountaineer).

DaimlerChrysler's passenger car performance is both disappointing and predictable. Most of DCX's car entries fit the mold as "placeholders" in the lineup, with little in the way of competitive factors drawing consumers in. DC's wish to only match competitive incentives given the current product portfolio has relegated the NLH (mid-size), JR (compact) and NPL (Neon) to inefficient "natural demand" volumes going forward. A year after launch, the RS minivans have missed internal targets by almost 20%, with little relief in sight.

Despite GM's incentive-laden market assault, volumes are still strong within the New Domestic ranks. Makers such as Toyota, Honda, and BMW are carrying their weight with robust demand for ost of their mass-market entries. VW and Nissan are experiencing some demand-related issues, although overall volumes are performing better than the general market.

The latest 2002CY CSM Worldwide setting for NAFTA light vehicle production is 15.3 million units--assuming a U.S. sales rate of 15.8 million units. Our assumption holds for a demand rebound during the second half of 2002CY given the interest rate reductions and fiscal/monetary stimulus.