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Bottom of the trough in sight? Automotive Market: metals suppliers are looking past 2008 at hopeful signs of an automotive rebound.

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THE NORTH AMERICAN automotive market might be weak right now, but not all is doom and gloom for the automakers and their suppliers. Some experts expect the market to improve substantially in 2009 and beyond.

"Next year has to be better. I can't see another 12 months of this," says Jeffrey Diener, general manager of Lee Steel Corp., Southfield, Mich. A disappointing first half points to the likelihood of a similarly dismal third quarter for the whole automotive food chain, including parts suppliers as well as the automakers, he adds.

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"Demand is quite weak," admits George Pipas, sales analysis manager for Ford Motor Co. in Dearborn, Mich. "That is to be expected given the concerns about an economic contraction, which is a nice word for recession. Whether it is or isn't a recession isn't important. What is important is the breadth and severity of this period of weak economic growth."

Consumer confidence has hit its second lowest level in 15 years due to all the economic uncertainty, leading to predictions that overall U.S. sales of cars and light trucks in 2008 will be down about 1 million units from last year, says Cindy Knight, a Toyota spokesperson.

"The good news is that the Federal Reserve is acting quickly to reduce interest rates and putting money into the banking system," adds Pipas. "Congress has passed the economic stimulus package, which should help consumers. So there is reason to be optimistic that economic growth will resume soon."

But perhaps not soon enough, says Mark Cornelius, president of Morgan & Co., West Olive, Mich. "The lower federal funds rate will help those consumers with adjustable rate mortgages and equity lines of credit, but will not free up a significant amount of discretionary spending as people have to deal with higher fuel and food prices and falling home values. Recent information indicates a deepening of the housing contraction as well as some softening in the labor market."

Morgan & Co. projects that U.S. auto sales will fall from 16.14 million vehicles in 2007 to 15.65 million in 2008, when North American light vehicle production declines...

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