[jyl]

My expectation/speculation -
- I think the auto industry hits bottom in 1H09 and then SAAR rises in 2010 and 2011. I'm thinking 12MM in 2010 and higher in 2011. Production follows with a 1-2 qtr lag. We're selling well under replacement levels and as kaisen notes, the avg light vehicle in the fleet is nearly a decade old. Financing, while not great, is not the limiting factor; there is less demand for car loans than there is supply. We may get a scrappage law eventually. GM and Chrysler will come out of this will dramatically reduced debt loads, lower labor and retirement costs, and more focused brands - maybe they'll have decent cars. Ford will get the same labor/retirement savings, although their debt will still be high. Their cars are already better than decent. The suppliers have been furiously cutting costs to be breakeven at 9-10MM SAAR, judging from 1Q reports some of them have reached that point. Some may have to file BK to get there. Similarly dealers, at least the public ones, have been sharply lowering their B/E points. When SAAR rises, I think the resized industry will make money again, and significantly more than people currently expect. I use the word "rise" not "recover", why SAAR should get back to 16MM in the next 5+ years is unclear to me.

To kaisen or others in the industry, I'd be interested in your views.