What did the "experts" say about 2005

[avant1963]

Every December the automotive "experts" give their predictions for the next year and people fawn all over it. What no one ever does is to look back and see how much of their "wisdom" came true. This year I'm going to do that with four automotive writers from Forbes. Last year some names you know (Flint and Dan Lienert) made their predications for 2005 and they were waaaaaaaaay off. Let's dissect their 2005 wisdom while asking ourselves, "Why the hell would I read and believe their 2006 predictions since their 2005 was so wrong.

First we'll take our favorite geezer, Jerry Flint. Let's take this one apart:

The Big Trend
Hybrids: They will keep scoring: 200,000 sales. Toyota (nyse: TM - news - people ) will sell every Lexus RX it can ship, and for top dollars, too. It's what folks will talk about.

Going out on a limb there Jerry. No kidding. Didn't predict the backlash though?

The Unconventional Wisdom
This will be a Ford Motor (nyse: F - news - people ) year, growing market share, good profits. Ford is back!


Whoops. Jumping the gun. Ford actually has lost more market share than GM this year. Maybe 2006. Wanna bet he says the same thing this year?

The Misplaced Assumption
That big trucks are finished. General Motors (nyse: GM - news - people ) may have some problems because its big boys, Suburban, Tahoe, Yukon, Silverado, Sierra and Denali are getting dated. But I see lots of big stuff moving, especially those super-duty Fords.

Jerry still has that thing for Ford here. Big SUVs are slowing, but pickups will never die (except for Titans). If it wasn't for the Katrina/gas price debacle, Jerry might have gotten this one.

The Watch List
• Ford. As above. See who young William is dining with. Dinner first, job offer next.

• Carlos the Gohan. Nissan (nasdaq: NSANY - news - people ) boss Carlos Ghosn.

• Robert of Lutz.

Jerry's not predicting Ghosn's demise, but I think we all see it coming. Go Bob!

The Bold Prediction
Two American companies, Ford and American Chrysler, will gain market share in 2005. Both will be very profitable, too. Profit troubles for most of the foreigners except Toyota and Hyundai. And the Dodge Charger will outsell the Chrysler 300.

We'll give Jerry the benefit of the doubt here because it is a "bold" prediction. Chrysler did gain share but the Charger is no way outselling the 300. Better luck in 2006.

Now to Steve Kitchen, a name I'm not too familiar with. You're up Steve:

The Big Trend
Automakers will sell fewer vehicles in the U.S. in 2005 than they did in 2004. Ford Motor (nyse: F - news - people ) and General Motors (nyse: GM - news - people ) have already announced production cutbacks for the first quarter. Chrysler (nyse: DCX - news - people ) is in better shape because of strong demand for its new big sedans. Three years of heavy sales incentives have wiped out a lot of pent-up demand and then some. Rising interest rates could deter whatever car buyers are left. In 2005, sales could drop to between 16.3 million and 16.4 million vehicles, though falling gasoline prices could dampen the decline. In a shrinking, bitterly competitive market, don't look for any significant decrease in financial incentives from the automakers, particularly domestic brands.

We're looking at a 16.7 to 17 million vehicle year in 2005 and here's a bad assumption "falling gasoline prices". That could throw off this guy's entire 2005 predictions.

The Unconventional Wisdom
While a weakening dollar is hurting foreign manufacturers, they aren't as vulnerable as one might think. Some of the most popular foreign nameplates sold in the U.S. are trucks, and many of those light trucks are built in the U.S.

Uh, Steve, it still hurts their bottom line because the money goes back to the homeland. Go protectionism! Ask Toyota how much they could have made if Japan would fix the Yen a little bit more.

The Misplaced Assumption
That hybrid vehicles are just for the Greens. Toyota Motor (nyse: TM - news - people ) has more than 9,000 pre-sold orders for its Lexus hybrid sport utility hybrid that's due in the spring. The upcoming Lexus RX 400h sport utility vehicle, with its V-6 motor, is supposed to deliver the fuel economy of a four-cylinder sedan and 0 to 60 mph acceleration under eight seconds. Lexus reportedly has a high-performance hybrid sedan in the works as well. Honda Motor (nyse: HMC - news - people ) claims that its new Accord hybrid has better acceleration than a standard Accord V-6. But once again, U.S. manufacturers are behind the Japanese in developing and implementing a new technology.

Yes, hybrids, we know. It was a buzz word last year at this time so no big prediction. Again the 400h helps fuel the backlash, but you missed that one.

The Watch List
•Buick. The GM marque is following the same defeatist strategy as Oldsmobile--of a shrinking lineup, unenthusiastically received new models and light truck offerings that are mostly badge-engineered Chevys.

•Chrysler. Will its bold new sedans have sticking power in the marketplace, or will the fashionistas and driving enthusiasts soon turn their attention elsewhere?

•Hyundai. The Korean company has made a big bet on the U.S., with a new high-volume factory and a redesigned Sonata sedan targeted directly at the Honda Accord and Toyota Camry family sedans. And watch the shootout in this sedan market, for even Honda is starting to feel the heat.

Buick, nah. Chrysler maybe, Hyundai - I drove the new Sonata and let me tell you it has nothing on the big guns. It may look better in and out, but everything still feels and works like an economy car. Hyundai will grow, but it still has a long time to be top dog.

The Bold Prediction
Last year I thought that Chevy would get hot. It is still lagging Ford in sales but closing the gap. In 2005 it has a shot at taking a narrow lead. A year from now, gasoline prices, currently averaging $1.90 per gallon nationwide, will fall back to the $1.55 to $1.60 range.

Good one on the gas prices. We'd love to have gas $1.55 a gallon.

Now to one of our favorite "experts" Dan Lienert. This should be good.

The Big Trend
The Big Trend for 2005 will be a surprising decline in sales of sport utility vehicles in the U.S.. This is because Congress has reduced by 75% business owners' tax writeoffs for "light trucks" that weigh over 6,000 pounds. Under the American Jobs Creation Act of 2004, which took effect last October, the first-year deduction for such SUVs has been reduced to $25,000 from $100,000.

He gets a win by a mistake. The reason SUV sales have flagged is not the tax write-off (could be good for a few) but gas.

The Unconventional Wisdom
Many people have not heard about the blossoming automotive markets in such violent and politically troubled areas as Russia and the Middle East. Russia's economy is attracting increasingly large foreign automotive joint ventures and investments, Some automakers, fearing the carpetbagging label, are publicly stating that they will not single out Iraq as a potentially lucrative car market--but General Motors' (nyse: GM - news - people ) Cadillac dealers in Saudi Arabia and the United Arab Emirates will reportedly spend $35 million over the next few years for about ten luxury showrooms that will include Hummers and Saabs.

Is there a prediction in there? WTF are you saying. Next.

The Misplaced Assumption
Automakers continue to fete "young, active buyers" and families, but old people should be more of a concern. The mass retirement of baby boomers hangs like a sword of Damocles over the companies. And older customers may feel jarred as some brands that have traditionally catered to them, such as Buick and Ford Motor's (nyse: F - news - people ) Mercury subsidiary, are trying to rejuvenate their looks and attitude with new vehicles and styling. The Japanese seem to be wise to aging, however; cars and futuristic prototypes designed for the elderly and the disabled were the centerpieces of this year's Tokyo Motor Show.

The DTS and Lucerne still cater to the old. I don't consider Ford's large and mid size cars in the same boat as Scion.

The Watch List
• American automakers: How high can their rebates get before they become untenable? Their labor costs? Their inventories? Their pension liabilities?

• Ford's Lincoln/Mercury subsidiary: Is a rejuvenated, hipper Lincoln/Mercury, which is ready to release several different new sedans, pickups and SUVs, just a creation of Ford's P.R. department, or are the nameplates about to find new life? Will the public accept a second pickup offering from Lincoln after the disastrous Blackwood? (Watch the Super Bowl for your first look at this new vehicle, the Mark LT.)

• GM's Bob Lutz: The stentorian opinions of GM's vice chairman are as respected as any in the auto business. He is credited for injecting more focus and energy into the development of GM's cars, but he will be 73 in February. When he retires, who on earth will replace him?

• Deathwatch: Mitsubishi. Isuzu. The Ford Taurus.

Labor costs and pension. Yup. Add healthcare. The Mark LT has sold about 8,500 units this year. Escalade EXT is at 7,200. Mitsubishi is looking better and I have no idea why Isuzu is still alive. And Dan, even in December 2004 we knew the Taurus was dead, so that ain't a prediction.

The Bold Prediction
Many automotive jobs will slowly migrate to China and India, beginning soon. GM is preparing a gradual transfer of a large number of white-collar jobs, such as engineering positions, to China and its base of cheaper graduate labor. Workers in GM's financially troubled European operations will be the first to go, but American jobs will follow, taking the industry's job security with them.

Another one not going out on a limb. "I predict in 2006 the sun will rise from the east and set in the west. Thank you."

Now to the last one, Joann Muller, another writer I'm not familiar with.

The Big Trend
Why do only the wealthy deserve safe cars? Finally, in 2005, automakers are putting technology like stability control systems and side curtain airbags into cars for the masses--often as standard equipment. Safety sells, they've concluded. The real advances are just around the corner--technology that not only protects you in a crash (like airbags) but helps you avoid an accident in the first place. Watch for new features like lane departure warning systems, cameras that can see blind spots and brakes that take over when you are not stopping fast enough, for instance. Then watch for the inevitable P.R. battle over whose cars are safer.

I'm glad she read press releases in 2004. Common knowledge. And I am not looking forward to a day when my car has brakes that "take over" and lane departure systems. You want to make cars safer? Take OUT distractions instead of putting them in.

The Unconventional Wisdom
Gas-electric hybrid engines get all the ink, but don't count out diesels. They're big in Europe but suffer a lousy reputation in the U.S. Today's clean diesels aren't anything like those loud, sooty engines of a generation ago. And they deliver a surprising performance. DaimlerChrysler (nyse: DCX - news - people ), which sells Mercedes and Jeep diesels, will spend a small fortune trying to educate consumers in 2005. If demand takes off, other automakers will start selling them, too. Convincing car buyers is only half the challenge. Automakers will also have to convince regulators in five states where diesel cars are banned, including California and New York, that the new diesels will help the environment.

Anybody look at what the price of diesel is today? A lot more than regular. Diesels will have their place, but it wasn't going to happen in 2005, unless you count the Liberty as the big breakthrough.

The Misplaced Assumption
The deals will last forever. Since 1997, car and truck prices have been falling, but alas, that trend has hit the end of the road. Incentives just aren't working anymore, as GM's (nyse: GM - news - people ) disappointing fourth-quarter sales attested. Meanwhile, headwinds are building: Raw material costs are rising, new regulations are taking effect and health care expenses continue to soar. With interest rates on the upswing, there is no way automakers can avoid passing these higher costs on to consumers. Watch for prices to start creeping up again in 2005.

Oh, GM will make sure the deal will last forever. Yippie Red Tags.

The Watch List
• Wolfgang Bernhard. The former chief operating officer at Chrysler has his work cut out for him trying to turn around struggling Volkswagen (otc: VLKAY - news - people ). The company is in a heap of trouble after mistakenly believing it could sell luxury cars under the VW badge. And its most important vehicle, the redesigned Golf, has been a disappointment. But Bernhard better watch his tongue. He has a reputation for being outspoken. Back at DaimlerChrysler, his promotion to run Mercedes was nixed after he ruffled feathers in Germany. He won't want to meet the same fate at VW, which recently axed the head of its Audi division for speaking bluntly about VW's mistakes.

• GM. Can it extricate itself from its messy relationship with Fiat? As part of a deal signed in 2000, Fiat has the right to sell its troubled auto business to GM. But GM has enough problems of its own and doesn't need Fiat to weigh it down further. The two sides entered mediation in December. This one is headed to divorce court.

Oh, we all know how the GM/Fiat deal went.

The Bold Prediction
At least one struggling automaker will fold up its tent in 2005. Number one candidate: Mitsubishi.

WRONG (but I would have predicted the same thing last year.)

So what do you think? Will you be waiting with anticipation for their predictions for 2006 or will you just understand that you can't predict the future and you'd be a lot better off thinking for yourself and not let these boneheads predict where the auto market will be in 12 months.

[Drew Dowdell]

Anybody look at what the price of diesel is today? A lot more than regular. Diesels will have their place, but it wasn't going to happen in 2005, unless you count the Liberty as the big breakthrough.

Who cares about the cost per gallon of diesel. What you need to look at is the cost per MILE to run the car.

You take a gasoline Benz E320. I'll take a diesel Benz E320cdi. We each get $20 for fuel. Which one of us will go further on that $20?

[ShadowDog]

And there is your reason why the MPG figure is too ancient a measure of fuel consumption. There are variables that just don't make the numbers seem accurate enough to use in the real world between two different vehicles.

A great link: http://www.caranddriver.com/article.asp?se...article_id=8699 Edited December 18, 2005 by ShadowDog

[76ChevyTrucker]

the other kickers to your mileage is of course things that are mechanical. Like are the tires at proper pressure, is the car loaded properly, and well, there's also issues like tune ups and such that can have a great bearing on how well the car performs

[mphmag]

Remember when i kept telling people how great mitsubishi's were back in the AB days and everyone said they were going to go out of business? Nah. Oh and hybrid civic, about 30 miles around town. Computer is saying 23 mpg. WAH!

[Flybrian]

Oh and hybrid civic, about 30 miles around town. Computer is saying 23 mpg.

WAH!

[post="60644"]<{POST_SNAPBACK}>[/post]

What's wrong with that? Its 4mpg better than my 10 year-old, two-ton, V8...oh...

[mentaloriental]

Remember when i kept telling people how great mitsubishi's were back in the AB days and everyone said they were going to go out of business?
Nah.

Oh and hybrid civic, about 30 miles around town. Computer is saying 23 mpg.

WAH!

[post="60644"]<{POST_SNAPBACK}>[/post]

Whatever, I'm averaging 44 mpg over the life of the car and I've had it for a year. Don't speed and don't gun the gas off the light. Sheesh.

[Member55]

Who cares about the cost per gallon of diesel. What you need to look at is the cost per MILE to run the car.

You take a gasoline Benz E320. I'll take a diesel Benz E320cdi. We each get $20 for fuel. Which one of us will go further on that $20?

[post="60362"]<{POST_SNAPBACK}>[/post]

How much more would the E320cdi cost to buy?