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Quick Hits: 1982 Redux for Automakers


Brief scrutiny of today's headlines.

Cheer up - it's looking like 1982 all over again.

J.D. Power and Associates expects US auto sales to fall to about 11.4 million units in 2009 - the lowest number since 1982, when 10.5 million cars were sold.

Slow sales will compound problems for US automakers trying to shed their image as builders of SUVs, trucks and other honkers as they move to fuel efficient models, hybrids and electric vehicles.

Weak auto sales also underscore wobbly consumer confidence and tight credit. Typically, auto sales total about 10% of US consumer spending.

President Bush has approved $17.4 billion in emergency funds for General Motors (GM) and Chrysler. The automakers need to get new concessions from the United Auto Workers and debt holders to succeed. Ford (F) hasn't asked for federal loans, but has asked for a $9 billion line of credit if the economy gets worse.

According to press reports, General Motors and Ford are attempting to sell their European luxury brands, Volvo and Saab. It's difficult to imagine a buyer stepping forward, raising the basic question: What next for the Swedish automakers?

Bloomberg reports that Steven Rattner, co-founder of Quadrangle Group, may be named "car czar" by President-Elect Barack Obama, though no offer has yet been made. The car czar would oversee deadlines and requirements to recast the auto industry.

Investors can only hope that Rattner's experience in private equity means he'll try to moderate efforts by Congress to micro-manage the auto industry as it struggles to survive.
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