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This report by CIBC's Jeff Rubin and Meny Grauman is getting a lot of play in the msm today:
http://research.cibcwm.com/economic_...d/feature1.pdf
Reducing vehicle ownership rates back to the late 1980s, a level suggested by both consumer deleveraging as well as higher fuel prices, implies future annual vehicle sales of somewhere in the eight to nine million unit range, or a further 30-40% reduction from 2008’s already depressed level (Chart 6).
Those sales levels imply that there will be a growing exodus of vehicles from American roadways that will continue well after the current recession is over. While some 2.7 million vehicles are likely to head for the exit lane this year, we expect to see even larger reductions over the next four to five years. Projected vehicle sales in the eight to nine million range, juxtaposed against a scrappage rate trending to 6%, means that roughly 5 million vehicles are likely to come off the road every year over the next five years.
[..]
Considering that average annual plant capacity in the US is roughly 250,000 units per year, our production estimate implies that roughly half of the US’s 51 light vehicle plants should be permanently shuttered over the coming years as the industry shrinks to fit the contours of a vastly smaller market. And these reductions will, of course, also flow through to the employment picture, where overall job losses in auto manufacturing could add up to another 200K positions.
*****
From Casinos, media join autos on way to bankruptcy
Bonds selling for dimes on the dollar show investors are expecting the worst, posted earlier today on marketwatch.com:
Several auto-parts suppliers' bonds are also trading at distressed levels, raising the risk of regional economic pain.
"The auto sector is very intertwined to a large complex of suppliers,"commented Michael Feroli, an economist for J.P. Morgan. "Big chunks of the Midwestern manufacturing base would be affected, as well as global manufacturing, so there is the potential for a very large ripple effect through the supply chain."
Visteon, a major manufacturer of parts for Ford, saw its fourth-quarter loss balloon and said on Feb. 25 it "cannot assure that it will remain in compliance with the terms of its outstanding debt instruments."
*****
The map says, "we're f*%$@d"!"
http://research.cibcwm.com/economic_...d/feature1.pdf
Reducing vehicle ownership rates back to the late 1980s, a level suggested by both consumer deleveraging as well as higher fuel prices, implies future annual vehicle sales of somewhere in the eight to nine million unit range, or a further 30-40% reduction from 2008’s already depressed level (Chart 6).
Those sales levels imply that there will be a growing exodus of vehicles from American roadways that will continue well after the current recession is over. While some 2.7 million vehicles are likely to head for the exit lane this year, we expect to see even larger reductions over the next four to five years. Projected vehicle sales in the eight to nine million range, juxtaposed against a scrappage rate trending to 6%, means that roughly 5 million vehicles are likely to come off the road every year over the next five years.
[..]
Considering that average annual plant capacity in the US is roughly 250,000 units per year, our production estimate implies that roughly half of the US’s 51 light vehicle plants should be permanently shuttered over the coming years as the industry shrinks to fit the contours of a vastly smaller market. And these reductions will, of course, also flow through to the employment picture, where overall job losses in auto manufacturing could add up to another 200K positions.
*****
From Casinos, media join autos on way to bankruptcy
Bonds selling for dimes on the dollar show investors are expecting the worst, posted earlier today on marketwatch.com:
Several auto-parts suppliers' bonds are also trading at distressed levels, raising the risk of regional economic pain.
"The auto sector is very intertwined to a large complex of suppliers,"commented Michael Feroli, an economist for J.P. Morgan. "Big chunks of the Midwestern manufacturing base would be affected, as well as global manufacturing, so there is the potential for a very large ripple effect through the supply chain."
Visteon, a major manufacturer of parts for Ford, saw its fourth-quarter loss balloon and said on Feb. 25 it "cannot assure that it will remain in compliance with the terms of its outstanding debt instruments."
*****
The map says, "we're f*%$@d"!"
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