Prognosticators Predict Slump in North American Automotive Output in 2007

SOUTHFIELD, Mich., Dec. 14, 2006 -- North American production will continue its slide in 2007, despite falling to a longtime low in 2006.

Ward's AutoForecasts projects total output in 2007 at 15.65 million units, 1.1% down from 2006's estimated 15.83 million, itself a 3.0% decline from 2005.

Slow demand in the year's first half due to expectations of sluggish economic growth will be the primary reason for the production drop.

Also negatively impacting production, several auto makers will continue trimming stocks of slow sellers heading into 2007, even though inventory levels are at their lowest in years.

Thus, first-quarter 2007 output is forecast to fall 6.2% from like-2006, followed by a 4.0% decline in the second quarter.

Production will make its first quarterly increase over prior year in the July-September period, followed by another gain in the fourth quarter. These will mark the first growth since first-quarter 2006.

Production is expected to continue its recovery on an annual basis, with output rebounding to 16.23 million in 2008.

A contributor to next year's decline will be the falloff in production of medium- and heavy-duty trucks. Output surged this year as demand rose prior to new emission regulations that take effect in January, which will raise the cost of diesel-equipped trucks built after 2006.

Ward's forecasts output of medium-/heavy-duty trucks will top 630,000 this year, followed by a 30.0% decline in 2007.

Conversely, production of light trucks will increase 3.9% in 2007 to 8.70 million units from an estimated 8.37 million units this year.

The increase will be spurred by capacity expansion of light trucks at Toyota Motor Engineering and Mfg. North America Inc. and Honda of America Mfg. Inc. Cross/utility vehicles from General Motors Corp., Ford Motor Co. and DaimlerChrysler AG will add to the truck mix.

Meanwhile, after two consecutive increases, car production will fall 4.8% to 6.50 million units in 2007. Estimated 2006 output of 6.83 million cars will be the highest since 2002, but the ratio of cars to light trucks is expected to continue a gradual decline through the end of the decade.

Ward's AutoForecasts details forecast North American production by manufacturer, plant, platform and vehicle line. A product of Ward's Automotive Group, Ward's AutoForecasts draws from Ward's extensive automotive database and from the many experts employed at Ward's for our news, data and analysis services.