Monday, January 12, 2009

Detroit Is Facing a Scary New Normality

The Wall Street Journal - In a memorable scene from the film "Apocalypse Now," napalm-odor fanatic Lt. Col. Kilgore declares with authority, "Someday, this war is gonna end" -- then walks off.

The U.S. auto industry, currently living through its own cataclysm, also knows things will calm down eventually. But, like Kilgore's bathetic gem, this knowledge offers little comfort and less insight.

Two questions are begged: When will things return to normal? And what will "normal" look like? Prior to the meltdown, when analysts talked of "trend" sales of light vehicles in North America, many had a figure of 16 million or 17 million in mind.

Such expectations, however, reflected a surge in vehicle purchases that began at the start of the decade. Data going back to the 1950s from the Center for Automotive Research show vehicle sales rising and falling around an upward trend. But the latest upswing was bigger and longer than any other. CAR's numbers suggest sales began moving ahead of trend in 1996, and really accelerated after 1998.

The long-run trend suggested a normal level of vehicle sales across the period 1996 to 2007 of 185.8 million units. Actual sales came in almost 11 million higher. The previous boom, in the 1980s, lasted half as long and above trend sales amounted to 6.6 million.

No comments:


Watch videos at Vodpod and more of my videos

Search This Blog

Blog Archive Video What's News US

NYT > Business

CNBC Top News and Analysis