Steady as she goes

Big Three economists got a little carried away 12 months ago when they predicted big things for 1995. Chrysler Corp. was the most bullish, forecasting 16.5 million car and truck sales. Now it looks like 15 million will come closer to the mark. Not bad, but well below bullish expectations.

Automakers enter 1996 with a "steady as she goes" stance, anticipating neither a boom nor a bust -- a "three-peat" if you will, with sales hovering around 15 million, or about the same as in 1994 and '95.

They are buoyed by the fact that '96 is a Presidential election year. Despite continuing wrangling over the budget deficit. Washington historically takes whatever action is necessary to keep the economy humming during a national election year; that's how you get re-elected.

A series of Federal Reserve Board interest-rate hikes during this year's first half -- aimed at forestalling inflation -- dampened sales, but since then the Fed has eased up. Automakers would like another drop in rates to fire up sales, but they can't argue with the Fed's strategy: Inflation has remained under control, a plus for the car market.

The Big Three also face labor negotiations in 1996, led by the United Auto Workers union's feisty new president, Stephen P. Yokich. One bright note: The UAW and the Big Three already are quietly working on health and safety issues, putting these key items at the forefront.

Numerous other issues face automakers in 1996. Buyers fret over prices, now averaging $20,000. The Japanese yen has weakened recently closing the price gap enjoyed by the Big Three. Mexico remains a mess. And European sales are weak.

On the plus side, major strides are being made by the Big Three in foreign markets, especially China and surprisingly in Japan. Transplants are adding capacity and jobs in North America. And General Motors Corp. and Ford Motor Co. are launching waves of new cars and trucks.

Ward's Auto World devotes 20 pages in this issue sizing up the industry's outlook, starting with the views of GM President John F. Smith Jr.