The North American auto industry squeaked through the final months of 2001 with an incentive-backed buying frenzy that sealed its second-best sales year ever.
Now the question is whether carmakers and suppliers must pay the price for those sales through the early months of 2002 or if, in fact, they actually managed to calm consumers long enough to ease their fears and soften the expected downfall.
Sales still will drop this year, by up to 1 million vehicles. That fall is hitting the industry hard, with Ford Motor Co. expected to cut jobs and close some plants.
``We've faced tough times before and come out stronger,'' Chairman and Chief Executive Officer Bill Ford Jr. said during an industry briefing Jan. 6.
But despite the drop in production to less than 16 million vehicles this year, analysts are guardedly optimistic, saying that the new year will bring a decrease. But, they said that drop will not be as bad as it could have been.
``If we look at the trend now in retail and how consumers are doing, we got a real burst in the final 10 days of December, which tells us that consumer confidence is on the mend,'' Gary Dilts, senior vice president sales for DaimlerChrysler AG, said in a Jan. 3 conference call.
North American auto sales in 2001 topped 17 million units for the third straight year, ending the year shy of the all-time record of 17.4 million a year earlier, but far better than the industry first expected in the wake of recession and the Sept. 11 terrorist attacks.
At that point, forecasters were predicting sales to drop by 30 percent in September and by about 15 percent in October. But automakers, led by General Motors Corp., rolled out a zero percent financing to lure consumers into showrooms.
The maneuver worked and October sales actually climbed by 29.2 percent.
``I don't want to say that we're out of the concerns that we've had, but maybe consumers are in a lot better shape than we gave them credit for at the beginning of 2001,'' said Paul Ballew, executive director of market and industry analysts for Detroit-based GM.
Inventory levels are lower this year than at the start of 2001, which should help ease worries of unexpected assembly plant shutdowns.
``You can imagine how much better we're feeling about the new year at DaimlerChrysler with lower inventories and higher sales,'' Dilts said. ``It should be obvious that looking downstream into the first quarter, we see some production opportunities there.''
Even some outside analysts are revising their outlook for the year. Banc of America's Ronald Tadross is citing improving consumer confidence and a forecast of sales of 15.9 million vehicles for 2002, up from 15.4 million just a few weeks ago. Tadross, based in Detroit, now anticipates a ``brief downturn'' for the industry, rather than an extensive falloff.
The industry still is facing a rough year and continued production cuts, noted George Pipas, manager of sales analysts for Ford Motor Co., even though the situation is not as bleak as earlier expectations.
``There is light at the end of the tunnel, but from an economic standpoint, we probably shouldn't expect to see a 17 million sales year in 2002, like we have the last three years,'' he said.