US Vehicles Sales Could Hit Thirteen Year Low (GM)(F)

By Douglas A. McIntyre Published Mar 18, 11:58AM EDT

Follow 24/7 Wall St. on Google

This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.

GM (NYSE: GM) and Ford (NYSE: F) already trade near 52-week lows because of high gas costs and the rising prices of commodities for components used in cars.

Now, JP Power is dropping its estimate for US light vehicle sales to 14.95 million. The research firm had earlier put up an estimate of 15.7 million.

According to Power "In the first quarter of 2008, sales are expected to average 15.2 million units, with sales in the second quarter falling to approximately 14.8 million units before beginning a slow rebound during the second half of the year and into 2009."

With vehicles sales of about 16.1 million in 2007, a drop to 14.9 million or below would be worth about $32 billion in total US car revenue based on an average price of $25,000 per vehicle. At current market share levels, the could push GM’s US revenues down by $8 billion and Ford’s down by $5 billion.

Neither company has the cost structure in place to weather that. Any savings from the UAW contract and cost cuts in 2006 are now in place and there is not much left to take out.

That means that loses at the big US car companies will be much greater than forecast just a month ago.

Douglas A. McIntyre

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.