THIS WEEK'S SEGMENT HIGHLIGHTS:

NETWORKING MEETING
Thursday, OCTOBER 29: 6pm
CUTTING EDGE PRODUCTIONS, INC.
22904 LOCKNESS AVE.
TORRANCE, CA 90501
PHONE: (310) 326-4500

Bill Dedes has been kind enough to offer his studio for our meeting - don't miss it!

Spotlight - Freelance Tips - Use this time to build your business
Social Networking -
Tips on how to use social networking effectively
Using social networking for charities
The State of our Industy - Recent feedback on the importance of meeting
Green Report - International Day of Climate Action

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Thursday, April 16, 2009

THE STATE OF OUR INDUSTRY


IS THE AUTO INDUSTRY SHOWING SIGNS OF A RECOVERY?

February 19, 2009

As auto sales continue to track near historic lows the days of 16 million unit selling rates are but distant memories.   Estimates of annual sales of 10 to 11 million units are the new thinking in a market (and economy) where flat is the new up.   Compete measures auto shopping behavior across the internet and uses a subset of that (visits to third-party automotive sites) to develop its proprietary measure of in-market vehicle demand.   Sales are a function of generating demand and converting that demand into purchases.   Using this data we have seen what may be the very first signs of a recovery.

The chart to the right shows market-wide new vehicle demand and reveals an uptick from November’s all-time low.  January 2009 demand of 2.56 million in-market shoppers was the highest in 11 months and down only 5% from January 2008 when new mid-size car launches drove industry demand higher.  The y-o-y decline in January 2009 was the lowest in 11 months.  But if this is the first sign of a demand recovery it is in its very early stages given that this was the lowest January demand level on record.  In any case, a slowing of y-o-y declines may at least suggest we’re near the bottom.


But even with a recovery, don’t expect sales to return to the days of 16 million units anytime soon.  Demand, currently running over 1 million shoppers below historic highs, needs to fully recover before sales can really take off.  If demand holds stable at January 2009’s 2.5 million shoppers, the industry would have to convert nearly 45% of those shoppers into buyers each month to reach 13 million unit sales for the year, the same as 2008.  That’s an ambitious target, one that would likely require a continued reliance on incentives to entice prospects.  Industry conversion averaged closer to 39% in the 4th quarter of 2008. That translates into a 2009 market of fewer than 12 million units for the year using the current demand trend.  In any scenario, even with a recovery, 2009 will remain a difficult year for automakers.  

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