U.S. Auto Production Flattens as Economy Starts to Slow

Washington DC August 30, 2010; The AIADA newsletter reported that after a year of big gains, a new forecast shows North American auto production flattening in the fourth quarter.

Automotive News reports that meanwhile, August sales numbers, due this week, are expected to be lackluster. It's true that retail sales of new vehicles have not snapped back nearly as much as in four previous recessions dating back to 1969. Sales and production remain on an upward track – but just barely. Growth is slowing, and analysts say a double-dip recession looks increasingly possible. Making year-on-year comparisons these days is dicey.

Cash for clunkers (happily)inflated August 2009 sales, and fourth-quarter 2009 production was swelled by a rush to rebuild inventories. August's seasonally adjusted annual sales rate – projected at 11.8 million by IHS Automotive and J.D Power – would be the second-highest this year, topped only by May's 11.9 million.

Forecasters, never particularly optimistic about this year after 2009's 10.4 million sales, are adjusting downward. This month both IHS Automotive and Power lowered 2010 forecasts a notch to 11.5 million. Jeff Schuster, J.D. Power's head of forecasting, reduced his August SAAR prediction to 11.7 million last week, from 11.8 million, because of "unexpected softness" in retail sales.

IHS Automotive forecasts a modest climb in production of three percent in the fourth quarter after rising 25 percent in the third quarter and 74 percent in the second quarter.