• by Karl Greenberg , October 1, 2009

The automotive category may see stronger sales ahead, but auto and finance pundits speaking at the yearly Automotive Hot Topics conference in New York on Thursday also said the economy is also turning around with about as much alacrity as a cruise ship on a sand bar.

David Wyss, chief economist at Standard & Poor's, says market dynamics are still bearish, and that consumers are spending less and saving more. "Saving has jumped up 5%; it was ridiculously low, but now consumers are saving twice what they did on average. We expect saving to stay relatively high, and that Americans will be much more cautious about spending and borrowing in general. You won't see a return to a 'don't bother to save, just spend and borrow' mentality."

Wyss added that a slow, tenuous recovery is likely as demand goes head to head with unemployment. "We see positive growth in the third and fourth quarters next year," said. "But," he warned, "it could get worse."

Sales numbers rolling in for September are certainly worse than those in August, when sales spiked dramatically as consumers traded in their clunkers under the government's CARS (Car Allowance Rebate System) program. General Motors saw sales in September drop 45%; Chrysler experienced a 42% decline in sales in September across its Jeep, Chrysler and Dodge brands.

Ford, Lincoln and Mercury sales were 6% lower than a year ago. Toyota Motor Sales, comprising Toyota, Lexus and Scion brands, posted a 16.1% decline versus the month last year. American Honda reported that combined sales of Honda and Acura vehicles dropped 23.3% compared to September 2008.

Jeff Schuster, executive director of automotive forecasting at J.D. Power & Associates, co-sponsor of the conference, says the industry will see a 50,000 to 60,000 unit-per-month "payback" from the 350,000 or so extra vehicle-sales in August from the government's CARS program. "From October to December, we expect to see a 140,000 to 150,000 units pulled ahead to July and August. "The CARS distortion, as we call it."

Per Schuster, J.D. Power predicts that the mix of vehicle segments in the U.S. market will get more balanced because of tight availability of compact vehicles and crossovers, which were sold out during the CARS program. "Sales of compacts dropped from 28% to around 18% this month," he says. "Sales of compact [crossovers] will also come down."

He says that the market will also get a shot in the arm from a raft of new vehicles coming in the next two years. "We are just coming off of a very low two-year period of new entries and redesign activity." He said that next year, there will be 7 new vehicles, and 17 new vehicles in 2011.