Prediction: '07 May Be Slowest Year Since Last Century

The prognosticators at Edmunds.com, an online research and marketing site for auto shoppers, have seen the future, and it's small. The Los Angeles-based firm is predicting 1.2 million units sold in November--flat versus last November--and a 2.5% decrease versus October.

Jesse Toprak, executive director of industry analysis at the firm, says Edmunds is predicting that no more than 16 million cars and light trucks will be sold this year. If so, 2007 will end up being the slowest year since 1998, thanks to the sub-prime sinkhole and high gas prices.

The latter effect will have helped small cars and compact SUVs, according to Michelle Krebs, who is senior editor at Edmunds. "Our analysis of vehicle segments indicates that compact cars and compact SUVs are achieving the most growth in November, while minivans and large cars are flailing," she said. "Consumers are now looking for maximum functionality in smaller, more fuel-efficient vehicles."

Per Edmunds, the combined monthly U.S. market share for Chrysler, Ford and General Motors dropped 2% to 51.2%. Ford will hold steady next month, predicts Edmunds, while Chrysler and GM will have slipped slightly in overall sales versus the same month last year.

Edmunds sees Chrysler sales dropping 11.2% in November to 146,000 units sold, while Ford will sell 176,000 units this month, down 7.6% from last month.

Toprak says that one driver for softer sales among domestics is their production cuts, particularly at Chrysler. "We knew going in that would happen. Because of gas prices, bigger cars and large SUVs are getting hurt," he says. "Also, the impact of housing woes is largely psychological; if you look at people directly impacted by the credit crunch, it's less than 5%. So you have 95% of the country on time with payments. What's happening is the value of houses is stagnant or decreasing. So customers are not in the cheeriest mood to go out and buy a car."

Comparing this year to last on a month-by-month basis is also misleading. Ford sales look at least level versus the same month last year, but last year was tough for Ford. Toprak points out that Ford's share of the U.S. market is now under 15%. "They will end with 14.5% or 15% market share. In 2002, they had 21% market share. That year, Toyota had 10% of the market--now it's over 16%." He says the company will see a 1.2% increase of sales this month versus the month last year; Honda will see much larger gains, and Nissan will have posted its biggest year-over-year increase in quite a while this month--up 9.5%--for a reason similar to Ford's. "Because of weak 2006, Nissan looks good this year."

Edmunds predicts GM's market share will be 24.3% through November 2007, down from 24.6% in November 2006 and 25.1% in October.

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