Research

AUTOMOTIVE RETAIL SALES EXPECTED TO DROP 14% IN 2009

Last April, one of the speakers at the SEMA National Education Conference was Alan Beaulieu, a principal of The Institute for Trend Research. His presentation, “SEMA, Planning for Change,” gave attendees a glimpse into the future of the U.S. economy. It is uncanny how much of what he said was right on the money and has unfolded in the months since April.  

Each month his firm issues an update called EcoTrends. The November issue has some interesting insights that may be useful to the specialty-equipment industry.

“Although it remains undeclared by the government, the U.S. recession began in the third quarter of 2008," states the publication. "The downturn will essentially encompass all of 2009. It will be the worst downturn since the early '80s, perhaps even every bit as severe as the early '80s. We don’t see the current business cycle recession shaping up to be anything like the Great Depression in magnitude.

"We are forecasting a 7.2% peak-to-trough decline in the U.S. Industrial Production 12 MMA (12 month moving average) data trend; the 1929–1932 leg of the Depression had the 12 MMA go down 48.1%."

Another publication, Trends Magazine, also builds the case that what we are going through now is nowhere near what the country experienced in 1929:

“More importantly, America’s economy is far bigger, more diversified, more productive, more innovative and more resilient than it was in the '30s or even the '90s. Unlike the 'tight money' and protectionist policies of the Depression Era, the government’s current Wall Street rescue efforts are helping to stabilize our credit system and economy. As a result, the prices of oil and other commodities have topped, interest rates are being lowered and efforts are being made to reinvigorate consumer and investor confidence." 

The EcoTrends report continues: "We think the recovery for the economy at large begins in 2010. Stock prices will partake in the business-cycle ascent. The question that begs to be answered at this juncture is perhaps: 'Will the eventual stock prices recovery be like each of the last two rising trends?'

"If it is going to be that good, the best strategy is to hold on to what you have and simply wait for the market to rebound and recoup all of your losses. Please understand that each of the last two rising trends were abnormally bullish and betting on another abnormality is not prudent, especially in light of the economic changes we see coming at us based on recent economic and political events.

“The Automobile Retail Sales 12 MMT has dropped to 14.169 million units, which means dealers have not seen this low a 12-month sales volume since 1994. The rates of change are clearly negative, and we do not see any signs that the consumer will be coming to the industry’s rescue anytime soon. Expect 2009 to come in 14.6% below 2008.”

Trends Magazine sees things a little different than the authors of EcoTrends.

“The Trends editors expect a sharp, one- to two-quarter slowdown in economic activity, followed by a relatively quick recovery in 2009. The basic economy remains strong, and many opportunities for innovation and profit still remain. Markets have gone down many times in the past, but the general trend remains 'upward and onward.'"

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