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2010 sure to be a brighter year for car companies
Sunday, December 27, 2009

It's not time break out the bubbly yet, but 2010 will likely be a better year for the world's automakers, experts say.

Most auto analysts are forecasting sales to be about 11.5 million cars and light trucks during 2010, a clear improvement over 2009, in which sales are expected to total about 10.3 million.

And yet, the 2010 predictions fall far short of what analysts used to consider a decent year for auto sales: 14 million to 16 million.

That's partly because consumers will be trying to recover economically in 2010, and a new car may not be a priority.

"Even with the gradual recovery of the economy, many Americans will need to address serious near-term issues such as loss of personal savings and wealth as well as focusing resources on projects, such as home repairs, that had to be deferred due to the recession," said Ed Kim, director of industry analysis at AutoPacific.

On the other hand, thanks to far lower debt -- General Motors' debt after bankruptcy fell to about 17 billion from $94.7 billion, for example -- much lower labor costs and fewer factories building fewer cars, most automakers' chances to make a profit are greater.

GM, for instance, can at least break even or make a small profit at the 10 million unit level, auto experts say.

Another factor working in the favor of better sales next year is that the nation is forming 1.2 million to 1.5 million new households annually, and 13 million to 14 million cars are scrapped annually.

Many analysts believe that Ford and GM will generally do well because each has a strong portfolio of future products.

In 2010, Ford will bring out its long-awaited Fiesta subcompact, and the compact Focus is expected to be unveiled at next month's North American International Auto Show in Detroit. In addition, Ford has about a dozen products in the pipeline that will be based on the new Focus.

Meanwhile, GM's Chevy Cruze, a compact sedan expected to get around 40 miles per gallon, is expected to sell well. Cadillac's CTS Coupe and CTS-V Coupe are likely to get a lot of attention, and Buick's sporty new Regal sedan will hit the road next year, too.

Chrysler may find the going a bit rougher in 2010.

The company does have its new full-size Chrysler 300 and Dodge Charger coming, along with the new Jeep Grand Cherokee, but their segments are not expected to sell well next year.

The strongest segments will be small cars, small crossovers, compacts and intermediate family cars. These sold slowly in 2009, but they are likely to sell better in 2010 because new models will bring more attention to those segments.

Chrysler, though, is saddled with its Sebring, Dodge Avenger and Dodge Caliber models, none of which are particularly popular, but will still be on showroom floors in 2010.

"Chrysler is likely to have a very tough 2010," said Tom Libby, an independent auto analyst.

Don Hammonds can be reached at dhammonds@post-gazette.com or 412-263-1538.
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First published on December 27, 2009 at 12:00 am