Honda Cars : Feds' crystal ball sees tough times for 2 bailed-out automakers | 2013 New Honda Car Reviews

Honda Cars : Feds' crystal ball sees tough times for 2 bailed-out automakers | 2013 New Honda Car Reviews 0

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Honda Cars : Feds' crystal ball sees tough times for 2 bailed-out automakers | 2013 New Honda Car Reviews
Honda Cars : Feds' crystal ball sees tough times for 2 bailed-out automakers | 2013 New Honda Car Reviews

By Christina Rogers

DETROIT -- President Barack Obama boasts about the successful reorganization of General Motors and Chrysler, but some in his administration are using forecasts that anticipate a lackluster future for those automakers.


Projections released by the EPA and the Department of Transportation predict that by the 2025 model year, Chrysler's sales will plunge to less than half of what they were in the 2008 model year, when the Wall Street financial crisis triggered an auto industry depression and catapulted GM and Chrysler toward government-run bankruptcies.


The U.S. Treasury still owns a 32 percent stake in GM; Chrysler has repaid its government loans.


GM sales in the 2025 model year are projected to be just about what they were in 2008, while overall U.S. vehicle sales are expected to climb 25 percent to 17.3 million vehicles in the same period.


Meanwhile, Volkswagen and Hyundai are expected to more than double their U.S. sales.
These are some of the predictions tucked away in the administration's 567-page proposal to lock in tougher fuel economy rules for the U.S. auto industry.


The proposal, released in November by the EPA and Department of Transportation, seeks roughly to double today's standards by raising requirements to an average of 54.5 mpg for each automaker by the 2025 model year. The new rules received the backing of 13 automakers in July.


VW and Daimler AG have refused to endorse the proposal because it creates no new incentives for diesel cars.


Rulemaking process
The 2025 model year projections are a part of the rulemaking process and are based on forecasts obtained by the federal agencies from the Department of Energy, as well as outside forecasting firm CSM Worldwide (now a part of IHS Automotive). A custom forecast, covering the years 2017-2025, was purchased from CSM Worldwide by the agencies in December 2009.
The figures will be updated before the rules are made final, and the public will have a chance to comment on the EPA-DOT rules in January.


The long-range estimates help set a baseline for where sales in the industry are trending even before the more stringent standards are in place. The projections are compiled by the government. Typically, automakers don't release such long-term forecasts publicly.
Chrysler, GM and Ford declined to comment on the 2025 projections.


In a statement, the National Highway Traffic Safety Administration, the arm of DOT that prepared the analysis, said: "The agencies' projections are based on the best information available to the agencies at the time. Such forecasts are always subject to change as the industry and economy shifts."


NHTSA declined to comment further.
The EPA also said in a separate statement: "The data were from DOE and CSM, a respected independent research firm. When EPA and NHTSA finalize the rule, we will update it with the more current data that becomes available."


The projections offer a glimpse into how U.S. regulators view the sales landscape in the coming years. The forecasts predict U.S. vehicle sales will hit 17.3 million for the 2025 model year -- up from 13.9 million in 2008 -- with major carmakers like Honda, Toyota, Kia and Nissan posting healthy double-digit sales increases.


Chrysler, now owned by Italian carmaker Fiat S.p.A., is the only major automaker expected to lose business during this time frame. Its sales are expected to plummet 54 percent from 1.7 million in the 2008 model year, to 768,241 in model year 2025.


That's a big departure from Chrysler's own publicly announced projections: U.S. sales of 2 million in 2014, up from 950,000 in 2009.


GM's sales will rise 3 percent to 3.2 million between model years 2008 and 2025, while Ford is expected to increase sales by 26 percent to 2.2 million in the same period, according to projections cited by the agencies.


Tesla, which sold 800 electric cars during the 2008 model year, is expected to sell 31,974 in 2025.


Dubious forecast?
Jeff Schuster, senior vice president of forecasting at LMC Automotive, said the government's figures for each automaker are a bit dated, especially given all the changes in the industry over the last few years.


Chrysler, which historically has had a truck-heavy lineup, is starting to add small car options that will help sustain sales even if gasoline prices rise.


Other automakers also will adjust their lineups in response to advances in fuel-saving technologies and shifts in consumer demand, making it tricky to forecast sales so many years in advance.


"When you get that far out, as a forecaster it becomes a crapshoot," Schuster said. "They don't even know what their lineup is going to be in 2025, so it's difficult for a forecaster to know."
Feds' projections for auto sales


The EPA and Department of Transportation include future sales projections for each automaker in the agencies' proposal for tougher 2017-2025 fuel economy standards released in November. The annual sales estimates are based on data provided by the Department of Energy and outside forecasting firm, CSM Worldwide.

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