El Segundo, Calif. — The downturn in the automotive electronics market hit bottom in the first quarter, paving the way for a return to annual growth in 2010, according to iSuppli Corp.
“After a dismal 2008 and first quarter, auto sales recently have performed more strongly than expected in some regions, mostly due to government-sponsored incentives,” said Egil Juliussen, principal analyst and fellow, automotive, for iSuppli, in a statement.
“While 2009 will still be weak, the second half of the year will bring a significant improvement in auto sales compared to the first. This will lead to an annual sales increase in 2010 for auto electronics categories including audio head units, navigation, Advanced Driver Assist Systems (ADAS), embedded telematics and Bluetooth,” added Juliussen.
U.S. sales of cars and light trucks suffered an 18 percent decline in 2008, and fell by 35 percent in the first half of 2009. Despite these statistics, iSuppli forecasts total 2009 U.S. auto sales to decline by 17 percent.
One major factor contributing to improved auto market conditions in the United States is the end of the uncertainty surrounding the bankruptcies of General Motors and Chrysler, according to Juliussen.
Another tide turner is the United States government’s program that offers cash-for-clunkers giving consumers incentives to trade in old cars for new models. This is expected to boost U.S. auto sales by 250,000 in 2009, reports iSuppli, and higher if the program’s $1 billion budget is increased.
Another factor is that year-to-year comparisons with 2008 will become much more favorable in the second half, since auto sales plunged in late 2008, said iSuppli
Auto sales are projected to increase slowly in 2010 to reach 15.5 million units in 2014. While this represents an improvement from 2009, 2014 sales will still be below the 2007 total, said iSuppli. U.S. auto production lags far behind its sales since a large portion of cars sold in the U.S. are manufactured in Canada, Mexico, Europe and Asia.
The only auto electronics sector set for growth in 2009 is Bluetooth HFI systems due to the success of Ford Sync and similar systems, said iSuppli.
iSuppli projects that worldwide auto sales will decline by 12 percent in 2009, but will increase in 2010 and will top 73 million units in 2014, up 11 percent from 2008.
Worldwide auto production will decline by 25 percent in 2009 due to excessive inventory levels at the end of 2008 and lower 2009 sales, according to iSuppli. The market researcher cautions that incentive sales surges in some countries may not be sustainable.