Tuesday, November 03, 2009

A Look Back at a the GM Sales Forecast

by Calculated Risk on 11/03/2009 07:04:00 PM

Just one more post on auto sales ...

The following table is from the GM restructuring plan, presented to Treasury in mid-February (no longer available online).

This data is for all vehicles (the charts in the previous post excluded heavy trucks). All information in Red is added.

Vehicle Sales Forecast Click on graph for larger image in new window.

GM overestimated sales in Q2. Of course they weren't planning on going bankrupt! And GM underestimated sales in Q3 because of cash-for-clunkers.

Overall their forecast has been pretty close for 2009.

And I wouldn't be surprised to see sales increase to 12 million plus in 2010, even with a sluggish recovery. That is about the replacement level for auto sales.

The real question mark is what happens in the later years. Although total sales in the U.S. were above 17 million for several years, some of those sales were probably the result of incentives and loose lending (buying cars using home equity, and many subprime auto loans). I doubt we will see a return to those practices any time soon.

I'd like to emphasize that the 10.5 million (SAAR) for light vehicles in October is a very low number, and is close to the average sales rate during the early '80s recession.

If sales increase to 12 million in 2010 that would still be worse than the depths of the '91 recession.