Government agencies see tough times in 2025 model year for GM and Chrysler

Article by Christian Andrei, on December 25, 2011

Despite President Barack Obama boasting about the successful reorganization of Chrysler and General Motors, projections released by the Department of Transportation and the EPA reveal a lackluster future for these two bailed-out car manufacturers. For Chrysler, it has been projected that by the 2025 model year, the company's sales will drop to less than 50 percent of what they were in the 2008 model year, the time of the auto industry depression triggered by the Wall Street financial crisis.

As for GM, 2025 model year sales are expected to be around what they were in 2008. Overall automobile sales in the United States are predicted to rise 25 percent to 17.3 million vehicles in the same period.

The vehicle industry crisis in 2008 brought the two automakers toward government-run bankruptcies. Chrysler has already repaid its government loans, while 32 percent of GM is still owned by the U.S. Treasury.

On the other hand, Hyundai and Volkswagen are anticipated to increase their U.S. sales by more than 100 percent. The predictions are part of the administration's 567-page proposal to lock in tougher fuel economy rules for the vehicle industry in the U.S. The proposal was released in November by the Department of Transportation and EPA.

It seeks raise fuel economy requirements to an average of 54.5 mpg for each vehicle manufacturer by the 2025 model year. These new rules have the support of 13 carmakers in July. Daimler AG and VW have refused to back the proposal because there are no new incentives for diesel automobiles.

The projections on the 2025 model year are in line with the rulemaking process. It is based on forecasts that the federal agencies from the Department of Energy have gathered, as well as outside forecasting firm CSM Worldwide, which is now a part of IHS Automotive. In December 2009, a custom forecast was purchased from CSM Worldwide by the agencies. It covers the years from 2017 to 2025. [source: Autonews]

Topics: gm, chrysler

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