Dismal J.D. Power Auto Forecast Looks Downright Prescient

(MoneyWatch)  It looks as if J.D. Power and Associates merely beat the rush when it issued a dismal auto sales forecast that looked far-fetched just seven weeks ago. Just in time for the New York auto show (March 19-20), Power on March 18 cut its 2008 auto sales forecast from 15.7 million, which was already on the low side, to 14.95 million. That would be the worst sales result since 1994.

At the time, the rest of the industry was still getting its head around forecasts that hovered around 16 million light vehicles, the worst since 1998, let alone below 15 million. U.S. sales in 2007 were 16,148,811, down 2.8 percent from 2006, according to AutoData Corp.

So the J.D. Power forecast caused a shudder, even some wisecracks amid the New York auto show buzz, to effect of, "What were those guys thinking?"At the time, Bob Schnorbus, chief economist at J.D. Power, cited the same litany of bad economic news everyone was seeing: the financial crisis, worsening oil prices, weak housing and stock markets, plus lower automaker discounts to retail customers, and the fact that automakers are purposely cutting unprofitable sales to daily rental fleets. But the timing of the Power forecast was ahead of the curve.

Since then, the rest of the industry has been inching closer to the Power estimate. Toyota Motor Sales U.S.A. Inc., for instance, cut its full-year 2008 forecast by about 300,000 in the last month, to around 15.2 million light vehicles. And even then, sales results for the first four months were so poor, hitting 15.2 million for the year assumes some improvement in the second half, said Bob Carter, Toyota Division group vice president and general manager, in a May 1 conference call.