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Saturday, May 30, 2009

U.S. Treasury Estimate: Five Years to Recover $50 Billion GM Outlay

by Calculated Risk on 5/30/2009 12:02:00 AM

From the WaPo: U.S. Hopes To Recoup GM Outlay In 5 Years

The United States would recover most of its planned $50 billion investment in General Motors within five years, according to a preliminary Treasury Department estimate that foresees the company ...

Among the key variables in any such forecast is the number of new cars sold annually in the United States as well as the estimate of GM's share of the market.

During the boom years, the annualized figure for car sales in the United States hovered around 16 million. Recently, it has fallen to between 9 million and 10 million on an annualized basis.

In regulatory filings, GM has estimated that the car market will rebound to 16 million by 2012.
GM Forecast U.S. Vehicle Sales Click on graph for larger image in new window.

This table from the GM Restructuring Plan (back in February) shows the GM baseline U.S. auto sales forecast and a comparison with J.D. Power and Global Insight forecasts.

Sales will probably be below the Q2 2009 estimate of 10.4 million annual rates since sales in April were at a 9.5 million SAAR - and sales will probably be very weak in May and June with Chrysler and GM in bankruptcy.

U.S. Vehicle Sales GM expects a modest recovery in sales over the next couple of years - and that seems somewhat reasonable - but it is important to remember that sales during the bubble were inflated as homeowners withdrew equity to buy vehicles. So achieving the levels of the boom years any time soon seems unlikely.

Note: This graph shows U.S. vehicle sales (auto, light truck, heavy truck) since 1967.