Final Inspection

Happy New Year

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TGIO (Thank God It’s Over).

Few will look back with fondness on the past year, punctuated by a 21% drop in new-vehicle demand in the U.S., bankruptcies at two out of three Detroit auto makers and enough job cuts to last a lifetime – not to mention the loss of a couple hangars’ worth of corporate jets.

Good riddance 2009.

Look for auto executives to be much more upbeat than a year ago when next week’s season-opening North American International Auto Show gets under way in Detroit.

And the sunny disposition won’t be a complete ruse engineered solely to spur still-anemic consumer confidence. There actually are some pretty good reasons to be at least mildly optimistic about 2010.

Most forecasters believe the U.S. market has bottomed out, and a stronger second half is seen taking sales above the 11 million-unit mark this year. That’s not great, but it is a reasonable gain from 2009’s 10.4 million and suggests solid momentum heading into 2011.

Auto makers have slimmed down enough to make money – maybe even big money – as demand inches upward to 12 million units and beyond.

I suspect the upturn could go even farther and faster than most are forecasting for 2010. Prognosticators remain a bit wary of the dim light at the end of the tunnel, as the few noticeable upticks in the economy haven’t worked their way into the auto industry yet and consumers continue to fret over the possibility of losing their jobs.

But there’s a host of critical new products on the horizon, from the Fiesta and Cruze small cars on their way from Ford and Chevrolet to plug-in hybrids and electric vehicles coming near year’s end from General Motors, Toyota, Honda, Nissan, Mitsubishi and others that could help stir interest and boost showroom traffic.

Inventories are in much better shape than a year ago, putting first-quarter North American production schedules some 67% ahead of like-2009’s pace and enabling auto makers to back away – at least a little – from profit-draining incentives.

Who knows? In the next six months or so, we may even see consumers begin to tire of the recession enough to take their lives off hold and resume spending on big-ticket items.

Are there still a few red flags out there? Sure.

As a group, suppliers, though weathering the economic storm better than expected, continue to teeter on the edge of solvency. Unemployment remains high, housing values low and consumer credit tight.

Some fear this recession even may have a second act.

But it’s more likely the bottom has been hit. And the only real questions are how quickly and how high the market climbs and who stands to gain when it does.

Let me know what your take is on 2010. Is the worst over or are we in for another tough go of it during the next 12 months?

A year from now, will we say TGIO on 2010 or view it more fondly as the start of something big?

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What's Final Inspection?

WardsAuto editors share insights and observations on the global auto industry.

Contributors

David E. Zoia

As Editorial Director, I oversee much of what goes into WardsAuto.com, enjoying a ringside seat that lets me observe up close just about every facet of the industry worldwide. I have covered the...

James M. Amend

James Amend is an associate editor at WardsAuto.com, covering day-to-day business and product news at General Motors. He also leads coverage of regulatory and environmental issues, as well as the...
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