America's automobile industry, one of the country's most basic business components, has had enough of 1980 already and is looking forward to better times later in the new decade.
There has been no ruch to dealers' showrooms to see the 1980 models -- except for a few vehicles with unusually low gasoline consumption and waiting lists for delivery.
Detroit's planning has been junked in the trashcan once more by a fickle consuming public that previously wanted larger cars, light trucks and receational vehicles. Now that same public wants only small cars, such as Chevrolet's Citaton (there currently are 225,000 orders for this hot item, in case you wonder why local dealers can't provide one overnight), and Detroit can't produce them fast enough.
As a consequence, job furloughs in an industry that now has massive inventories of unsold and unwanted cars are moving steadily higher.Unemployment could reach the level of 215,000 persons out of work during the 1974-1975 recession. Sales of U.S.-manufactured autos also may plummet to the 8 million level, again matiching the recessionary levels of the mid-1970s.
Auto sales have been on a study decline for nine months, as fears about energy supplies and costs convinced consumers to think twice about car buying. Moreover, some recent sales have been "borrowed" from the future in the form of rebates and incentives to dealers to move cars out of their showrooms and into the nation's driveways.
Dean Witter Reynolds Inc. has forecast a 7 percent reduction in worldwide production this year and a 20 percent decline in profits at the industry giant, General Motors Corp. Ford Motor Co., whose No. 2 position in the U.S. market was supplanted last year by combined import sales (22 percent to Ford's 21 percent), has been unprofitable in North America. And beleaguered Chrysler Corp. is alive tentatively today only because of proposed federal government largesse and wage cutbacks by its United Auto Workers union employes.
With continuing uncetainties about uniterrupted gasoline availability, weakened economic conditions in this country and turmoil abroad, the auto industry has braced itself for a very bad year. Overall industry sales probably will fall 10 percent or more from the level of 1979 -- which ended up os the fourth best sales year ever, with 10.6 million cars and 3.5 million trucks sold by the American companies.
GM Chairman Thomas Murphy, a career optimist who is scheduled to retire at the end of 1980, prefers to look far into the year for some solace. Rather than the steady sales decline that was recorded for the last three quarters of 1979, Murphy expects a reverse trend this year -- with daily sales rates starting to move up by mid-year and volume a year from now "at substantially higher levels."
Murphy bases his forcast for a resumpton in auto sales growth later in the year on the "fundamental soundness" of the current economy. "As a result of prolonged warnings regarding an economic slowdown and record levels for short-term interest rates, businesses have been maintaining careful control over invetories," he said.
The GM chief regrards this barometer a especially significant because two-thirds of the average reduction in gross national product in the past five recessions has resulted from excessive inventory accumulation.
Ford President Philip Caldwell also prefers to look beyond 1980. "Cars and trucks remain valued and useful products, and we expect that unit sales in the U.S. will grow by 2 percent per year over the coming decade," he asserted.
Of all the Detroit auto optimists, Chrysler Chairman Lee Iacocca has the most to lose if an expected industry recovery doesn't start in 1980. Chrysler is forecasting a very bad year for the industry and for itself but has projected recovery starting when 1981 models are introduced in the fall -- including a line of small, fuel-efficient Chrysler cars that should be competitive with GM's successful front-wheel drive X-body compacts.
If Iacocca's projections for an increase in Chrysler's share of the market during the early 1980s prove incorrect, the company is certain to fail even though it has interim federal loan guarantees. With GM now taking some 60 percent of domestic sales and Ford also seeking to rebound, Iacocca has a tough challenge.
American Motors Corp., benefitting from a new financial association with Renault and public acceptance of AMC's diverse, four-wheel-drive Eagle line of vehicles, is the only Detroit-based automakers expecting 1980 to be better than 1979. Sales of 1980 models are running some 50 percent above year-earlier levels, and Eagle production is being increased.
Volkswagen of America Inc. also expects a good year in 1980 and may break even or turn a small profit on fledgling U.S. manufacturing operations for the first time. VW expects to sell about 325,000 cars in this country in 1980, about 100,000 imported and the balance produced in the United States.