IHS Automotive: "No Double-dip Recession"

"It's a slowdown, not a double dip." -- Nigel Griffiths, chief auto economist, IHS Automotive.

Growth is painfully slow, and will remain that way going forward, but the prospects for a double-dip recession are diminishing say the experts at the consulting firm IHS Automotive.

The firm's chief auto economist, Nigel Griffiths projecting a very slow 2.2 per cent growth rate in the United States next year. He says 2 per cent growth is needed to keep employment steady. So, any gains will be small ones.

"The U.S. normally comes out of a recession pretty fast," says Griffiths. "We haven't seen that this time."

Griffiths telling WWJ AutoBeat Reporter Jeff Gilbert that this will translate to a car and truck sales rate of 11.3 million units this year, down from the 11.8 million IHS had originally expected. The firm forecasting gradual growth into the middle of 2001, with the pace picking up after that.

Griffiths projecting 12.8 million sales in the United States in 2011.

"It's all about consumer confidence and about jobs," he said. "We do see them recovering slowly."

A slow recovery, Griffiths says, is still better than another dip into recession, which would take 7 million vehicles out of the car and truck market.

(IHS Automotives Nigel Griffiths talks with WWJ's Jeff Gilbert and other reporters.)

Griffiths says, in hindsight, the downturn wasn't as bad as many expected, with global auto markets dropping nine per cent, not the twenty per cent rate that had been feared. Griffiths says since the stock market bottomed out early last year, global stock market wealth has increased by $20 trillion.

"The recovery we've seen on a global basis has been amazing," said Griffiths.

Globally sales have recovered to the point that IHS Automotive is projecting 69.6 million vehicles will be sold next year. Seventy-five per cent of that growth has come in one place – China.

"We don't have double dip in China. We don't have single dip. We don't have dip," said Tianshu Xin, who analyzes the China market for IHS Automotive.

China is now the world's largest car market, and demand is growing. There are projections that annual auto sales in China could be in the 30 – 40 million unit range by the middle of the next decade.

The Chinese government—which stimulated the market this year, is now working to slow it. A recent 9 day long traffic jam outside Beijing showed that difficulties Chinas infrastructure has in keeping up.

"In China, we don't measure our traffic jams in hours or minutes," said Tianshu Xin. "We measure them in days."

Other parts of the world, including Europe and Japan are showing less growth. A worsening currency situation could push more of Japan's small car production to other countries, like the United States, where those vehicles are sold.

IHS Automotive projecting a near doubling of total U.S. automotive production during the 1997-2007 period.