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Auto Industry Enjoys Banner Year...in 2010!

The news is in: The auto industry had a banner year--in 2010. The information comes from industry research firm IbisWorld ("Where Knowledge is Power"). Actually knowing how the car companies will fare next year is power, indeed. According to the company's analysis, auto manufacturing will see a 19.1 percent increase in revenue, up from a dismal â€"30.5 percent in the brutal year we've just suffered through.

In 2010, says Ibis World, both carmaking and motor vehicle body manufacturing (itself up 12.5 percent from the â€"26.8 percent growth of 2009) will, with new car dealers, be positioned as "the top three growth industries in terms of employment for 2010." The auto workforce will grow 16 percent, the company says. The analysis also sees a rebound in finance, oil and gas, retail and health care.

The new year will sort itself out--industry recovery obviously depends on a continuing rebound in the economy, and the outlook on that changes almost daily. But let's look at a 2009, when U.S. auto manufacturing revenue shrank 30.5 percent. Here's a factoid, courtesy of a tweet from Andrew Revkin, the departing climate change reporter at the New York Times: "US car fleet shrank ~ 4 million vehicles. But don't count on that being the new norm."

In 2009, automakers will likely sell only 10.4 million cars, according to BusinessWeek today. That's the fewest since 1982. There was good news only for Ford, which added market share as Chrysler and GM went through financial convulsions. Analyst Mirko Mikelic of Fifth Third Asset Management in Michigan predicted "a slow, fragile recovery in 2010." He added, "It will be a slow slog. With the wind down of brands, GM's going to be paying the price. And Ford will benefit."

There are some good things that come from slow car sales, believe it or not. Lester Brown, the founder of Worldwatch, pointed out in a Miller-McCune interview that, according to Department of Energy figures, oil use went down five percent in 2008, and is headed for another five percent decline in 2009. Coal use went down an incredible 10 percent in 2009, after a one percent drop in 2008.

Carbon emissions were also down, three percent in 2008 and six percent in 2009. "There is a tendency to think of this as just a temporary thing," Brown said. "There are things in motion now that almost guarantee that carbon emissions are going to be dropping for some years into the future, and that's what I find of most interest."

One reason for a continuing carbon decline, despite a probably auto sales rebound in 2010, is the Obama Administration's new auto fuel economy standards, which require 35.5 mpg by 2016. That's a 42 percent increase in mpg for cars, and a 25 percent increase for trucks by 2016. "That's a very substantial factor when predicting fuel use and carbon emissions," Brown said.

Another factor, albeit a very small one initially, is the zero-emission electric cars that will hit the market next year. Their impact will be infinitesimal at first, but it will grow quickly. So 2010 could offer both a revival of the auto industry and continued declines in oil dependency and carbon emissions. Happy New Year!

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