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January 08, 2007 01:00 AM

Auto-sales plunge is likely to continue

Rhoda Miel
Managing Editor
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    During the past 12 months, the auto industry has suffered through bankruptcies, production slowdowns, price increases for raw materials, shaky credit and a faltering bottom line for automakers and suppliers alike.

    Now things are about to get worse.

    Industry watchers are predicting that U.S. auto sales will fall to their lowest level in nine years, with a projected 16.2 million cars and trucks to be sold in 2007 - down from 16.4 million for 2006.

    While sales numbers may remain stable or even grow for Japanese automakers like Toyota Motor Corp. and Honda Motor Co. Ltd., North America's Big Three all are expected to see a drop, according to analysts with CSM Worldwide, a Novi, Mich.-based auto consulting group.

    In fact, Toyota - which already has passed DaimlerChrysler Corp.'s share of the North American market - soon could rival Ford Motor Co. in North American sales, said Joseph Barker, CSM's senior manager of global sales forecasts.

    Toyota will claim an estimated 16.3 percent of the market in 2007, compared with Ford's expected 18.2 percent. Toyota already has passed Ford for some months - and has said it expects it could overtake Detroit-based General Motors Corp. as the world's biggest automaker in 2007.

    That means more problems for suppliers that focus on the Big Three. Both Ford and GM are in the middle of turnaround efforts that are cutting costs and shifting production. Chrysler has been making changes in its top executive ranks as well.

    ``I recognize that the GM that I grew up in no longer exists,'' Troy Clarke, president of GM North America, said during a Nov. 21 speech to the Automotive Press Association. ``I have no romantic notions of returning to the good old days.''

    Big suppliers are making their own changes in response. Visteon Corp. is cutting its salaried workforce by 900 people because of reduced production by its customers. Johnson Controls Inc. is restructuring its injection molding operations and closing plants to focus on value-added products using its own proprietary technology.

    There simply are too many cars on the market, and not enough buyers, Barker said.

    And if that is not enough, plastics auto suppliers will see their ranks continue to shrink and change.

    North America's largest injection molder, auto supplier Collins & Aikman Corp., expects to split up its holdings as it sells its assets through bankruptcy proceedings.

    Delphi Corp. has its injection molding/heavy interiors unit on the block, while Ford is continuing to seek out buyers for former Visteon plants now operating under the name Automotive Components Holdings LLC.

    ``There's still excess capacity out there,'' said David Youngman, a spokesman for Southfield, Mich.-based C&A.

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