Analysts reportedly predict dismal sales for Detroit’s Big Three this autumn, as rising petrol prices diminish SUVs’ popularity.
The Associated Press said tensions are high at General Motors, which is pressuring the United Auto Workers to lower health care costs, and Ford, which is developing a new restructuring plan that’s likely to include job cuts and plant closures.
If that wasn’t bad enough, the largest components supplier to the US industry, Delphi, is threatening to declare bankruptcy by October 17, which could set off a wave of other bankruptcies among smaller suppliers, AP added.
Sean McAlinden, chief economist for the Centre for Automotive Research, told the news agency that the Big Three and their suppliers could cut as many as 75,000 jobs before this latest round of restructuring is over.
GM has said it plans to cut 25,000 jobs before 2008, AP added.
Despite such a gloomy outlook, the Associated Press said US vehicle sales are healthy overall with several analysts predicting that 2005 sales will be around 17 million vehicles, unchanged or up slightly from 2004. September sales figures are being released on Monday.
According to AP, Merrill Lynch analyst John Casesa recently told investors that Asian brands, which didn’t offer an ‘employee discounts’ programme this summer, haven’t seen the kinds of highs and lows plaguing GM and Ford, and their US market share could climb nearly 10% in September to 43%, with Honda reporting a particularly good September thanks to the launch of the 2006 Civic.
The report noted that DaimlerChrysler‘s Chrysler Group also has been holding steady. The division went through a painful restructuring several years ago and has several hot sellers including the Chrysler 300 and the Dodge Charger, and Casesa predicts Chrysler’s sales will be down 3% in September, AP said.
On the other hand, analysts told the Associated Press that GM could see sales declines of up to 30% in September, while Ford’s sales could fall up to 20%.
“The only bright spot left this year could be December, which is typically driven by year-end sales campaigns,” Casesa reportedly said.