North American automotive output to decline in 2007

Ward's AutoForecasts has predicted that North American auto production will continue its slide in 2007, despite falling to a longtime low in 2006. Total output in 2007 is projected to be 15.65 million units, 1.1 percent down from 2006's estimated 15.83 million, which was a 3.0 percent decline from 2005.

Ward's said slow demand in the year's first half due to expectations of sluggish economic growth will be the primary reason for the production drop.

Also negatively impacting production, several automakers will continue trimming stocks of slow sellers heading into 2007, even though inventory levels are at their lowest in years.

First-quarter 2007 output is forecast to fall 6.2 percent from like-2006, followed by a 4.0 percent decline in the second quarter.

Production will make its first quarterly increase over the prior year in the July-September period, followed by another gain in the fourth quarter. These will mark the first growth since first-quarter 2006.

Production is expected to continue its recovery on an annual basis, with output rebounding to 16.23 million in 2008.

A contributor to next year's decline will be the falloff in production of medium- and heavy-duty trucks. Output surged this year as demand rose prior to new emission regulations that take effect in January, which will raise the cost of diesel-equipped trucks built after 2006.

Ward's forecasts output of medium-/heavy-duty trucks will top 630,000 this year, followed by a 30.0 percent decline in 2007.

Conversely, production of light trucks will increase 3.9 percent in 2007 to 8.70 million units from an estimated 8.37 million units this year.

The increase will be spurred by capacity expansion of light trucks at Toyota Motor Engineering and Mfg. North America Inc. and Honda of America Mfg. Inc. Cross/utility vehicles from General Motors Corp., Ford Motor Co. and DaimlerChrysler AG will add to the truck mix.

Meanwhile, after two consecutive increases, car production will fall 4.8 percent to 6.50 million units in 2007. Estimated 2006 output of 6.83 million cars will be the highest since 2002, but the ratio of cars to light trucks is expected to continue a gradual decline through the end of the decade.