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Vehicle Production To Decline In '07, Rebound in ‘08

December 28, 2006

North American production is expected to continue declining in 2007, according to Ward’s AutoForecasts.

Ward’s Auto projects total output in 2007 to be 15.65 million units, down 1.1 percent from 2006’s estimated 15.83 million and a 3 percent decline from 2005. Slow economic growth is believed to be the primary cause of the decreased demand for new vehicles. Several automakers will continue cutting inventories of slow sellers, even though inventory levels are already “at their lowest in years.”

First-quarter 2007 output is forecast to fall 6.2 percent from first quarter 2006, followed by a 4.0 percent decline in the second quarter. Car production is expected to decrease 4.8 percent to 6.50 million units in 2007. Production will then make its first quarterly increase over prior year in the July-September period, followed by another gain in the fourth quarter, Ward’s predicts. These gains will mark the first growth since first-quarter 2006. Vehicle production is then “expected to continue its recovery on an annual basis, with output rebounding to 16.23 million in 2008.”

The falloff in production of medium- and heavy-duty trucks will contribute to next year’s decline. Ward’s has forecasted the output of medium- and heavy-duty trucks will reach 630,000 this year, followed by a 30 percent decline in 2007. Although overall output is expected to decline, the production of light trucks is expected to increase 3.9 percent in 2007 with 8.70 millions units compared to 8.37 million in 2006.

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