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Executives see auto industry sales stabilizing

Associated Press

CHICAGO – Auto industry executives are seeing signs that the nation’s automobile industry is beginning to stabilize, after months of free-falling sales that have threatened the viability of some of the sector’s biggest players.

Jim Farley, Ford Motor Co.’s global marketing chief, said Wednesday that seasonally adjusted retail sales demand has held steady for the past four months. Meanwhile, the country’s used car market has come “roaring back” since January.

“That shows me that credit’s available,” Farley said after a Ford presentation at the Chicago Auto Show. “When we’re seeing the kind of growth in the used car market that we’ve seen in the last six weeks, that is a really important milestone for the bottoming out of the industry.”

General Motors Corp.’s Ed Peper was even more upbeat.

“I think we’re at rock bottom,” the North American vice president for Chevrolet said in an interview with the Associated Press. “I would say we’re at the bottom and stabilizing. I think it gets a little bit better each month for the rest of the year.”

But on the heels of another calamitous month for the sector – U.S. new car and truck sales fell 37 percent in January, hurt especially by poor sales to fleet buyers like rental car companies – the industry’s fortunes are tenuous at best. James O’Sullivan, president and CEO of Mazda North America, said a lot of people think the industry has hit bottom, but he’s not so sure.

Mazda has seen an uptick in showroom traffic this month, “but nothing comes to the point that says, ‘hey, we’re out of this thing right now,’ “ O’Sullivan said.

Mazda is still predicting U.S. vehicle sales in 2009 will be slightly above 11 million, with much of that coming in the second half of the year. Other automakers and analysts have been predicting industrywide sales will drop as low as 10.5 million after falling to 13.2 million last year from 16.1 million in 2007.

O’Sullivan said there are many potential buyers sitting on the sideline due to lack of confidence in the economy.

Still, auto industry analyst Erich Merkle said he thinks the industry may have finally reached a tentative plateau, particularly if labor markets can stabilize.

“We’re really at that crucial inflection point right now,” he said. “And with all the money right now that’s being pumped into the system … I think that we’ll start to see some revival in our economy and we’ll start to see sales on a sequential basis exceed that of the first quarter.”

But that doesn’t mean the sector is headed toward a substantial rebound just yet. More bad economic news could easily erode any gains the industry may make after posting 15 straight months of sales from the previous year.

“I think what we’re going to do here for the next couple of months is trace along the bottom,” Merkle said, “and as we get to the second half, we’ll see some improvement.”

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