A few years ago, one of the guests at our annual Reuters Autos Summit — Tom Stallkamp from Ripplewood — pretty much stopped everyone dead in their tracks by predicting that auto sales in the United States was likely to fall to an obscenely low level of 14.5 million.

Those were the days.

Of course, Stallkamp was making that prediction at a time when U.S. car manufacturers were selling in the neighborhood of 16 to 17 million a year. If the number hits 14.5 million in 2010, people will be wild with enthusiasm as most now expect something in a range of 10 to 11 million.

That would be about flat to a little higher than sales this year.

On the first day of Reuters annual sojourn to Detroit for the Reuters Autos Summit, defining what the “new normal” is going to be for everything about the auto industry is much on everyone’s mind. What will happen with the big manufacturers, the dealerships, the suppliers.

It’s a lot to assess all at once.

Bob Carter, head of Toyota’s U.S. operations kicked things off for the summit by talking about what he sees for the coming year.

The Reuters Autos Summit runs through Thursday in Detroit and Paris. For an audio clip of Carter’s comments, please click this link (Toyota’s Bob Carter at the Reuters Autos Summit).

After a year of unprecedented turmoil in the auto industry, BMW’s U.S. head smells blood in the water.

Changes in ownership at some of its historic European rivals may present the German luxury automaker with a chance to grab market share. 

But even as Jim O’Donnell saw weaknesses to exploit, he raised the worry that one of Detroit’s most storied car brands, Cadillac, could take out of the market of the company that calls its vehicles “the ultimate driving machine.” 

As Cadillac’s parent company, General Motors Corp, went through a bankruptcy that forced it to cut thousands of jobs and shed brands, BMW picked up Cadillac customers and dealers. But a slimmed down GM could present a renewed threat, said the president of BMW’s North American unit. 

“Going forward, I actually see Cadillac as one that could be potentially a serious rival,” O’Donnell told the Reuters Autos Summit in Detroit. “Now that GM is only going to concentrate on four brands, if I was at GM, I would concentrate on Cadillac and really try and reestablish it. But if you look at the last year, and no wonder because of the turmoil in the marketplace, has been losing sales quicker than the market.”

Even as he sees a renewed threat from Detroit, O’Donnell said he thought European rivals could become more vulnerable. BMW sees a chance to snatch customers from Saab — which GM aims to sell to Swedish luxury car maker Koenigsegg — and Volvo — which Ford is negotiation to sell to Chinese automaker Geely. 

“Where are all the Saab customers going to go? And there’s a great deal of uncertainty over Volvo. Where are all the Volvo customers going to go? Even though they’ve done well these last three months, I still think as they come under the ownership of Geely, will they have the same believe in the brand? I don’t know,” O’Donnell said. “But we will try to exploit it.”

When General Motors rolled out its new “May the Best Car Win” ad campaign this fall, it turned its competitive fire on Toyota Motor Corp, rather than one of its Detroit competitors. 
Toyota, which last year displaced GM as the world’s largest carmarker, takes the ads — which compare the Chevy Malibu with the Toyota Camry — as something of a compliment. 
“When Ford names Toyota and not Chevrolet and when Chevrolet names Toyota and not Ford, that speaks to some consumers about our position in the market,” Toyota group vice president and general manager Bob Carter told the Reuters Autos Summit in Detroit. “So it’s not all bad.” 
But the Japanese automaker has no interest in getting drawn into an advertising tit-for-tat similar to Apple Inc’s “Get a Mac” ads, which compare a young, hip actor representing a Macintosh computer with a dowdy middle aged actor playing a PC run by Microsoft’s Windows operating system. 
“We think the most effective way to approach the market is to talk about our products and our brands,” Carter said.

The first week of November may provide more clues about the health of the U.S. auto industry.

On Monday, Ford reports third quarter results. On Tuesday, automakers release October sales figures. And, on Wednesday Chrysler’s new CEO Sergio Marchionne is expected to unveil his 5-year turnaround plan for the company. Auto industry veteran Michelle Krebs, Senior Analyst at Edmunds.com, joins us to preview the week ahead. Speaker: Michelle Krebs Sr. Analyst, Edmunds.com Presenter: Ruben Ramirez Dearborn, Michigan

There is only one market really booming in the world and that is China, pity Peugeot only has a very small market share there.

Nicolas Wertans, deputy managing director of the Peugeot brand at Europe’s second-biggest carmaker PSA Peugeot Citroen, recently went to Beijing.

“It is the only market that is still booming, at more than 70 percent month-on-month,” he told the Reuters Automotive Summit. “In fact, China came to the rescue of the automotive world,” he said as all carmakers are boosting their sales in that market which is set to become the biggest in the world.

But Peugeot is rather small in China, with a market share of just 1.2/1.3 percent.

PSA in total has a share of 3.5 percent and chief executive Philippe Varin has said this needs to rise to at least 10 percent. To get there, Peugeot is working on a new model, especially designed for the Chinese market.

It will be a sedan, Wertans said, but he declined to give more details.

The car needs to become the flagship model for the market there. “You will hear more in a few weeks,” he said.

One of the big challenges for French carmaker Renault, which ranks third in the world with Japanese partner Nissan and Russian ally AvtoVAZ, is that it is too complex, chief operating officer Patrick Pelata told the Reuters Automotive Summit.

“Renault is a complicated company,” he said and explained how many carmakers had embraced a matrix organisation to deal with their international expansion. “We’re definitely more complicated than Nissan,” he said.

He should know, he worked several years with Carlos Ghosn at Nissan and found met his wife in Tokyo.

Pelata, who was born at the feet of the Pyrenees mountains in Les Pujols in 1955 before studying at the prestigeous Polytechnique and Ponts et Chaussees schools in Paris, is in charge of diminishing this complexity and eking out costs. 

But while fixed costs were reduced by 17-18 percent in the past few years, the car markets collapsed at the same rate and the company needs to find more cost reductions.

Not just in France, where the firm is making some adjustments to its plants around Paris, but also in Latin America and South Korea where benchmark studies — against Volkswagen for instance — showed that improvements can be made.

The alliance with Nissan — set to become the second-biggest car group in the world after Toyota if GM decides to sell Opel/Vauxhall later this week — is also a lever for further cost cuts and Renault and Nissan have changed the command structure in the alliance so that it becomes more difficult for managers in the two companies to stop or delay alliance efficiency measures.

“In the allliance there were a lot of brilliant ideas, but the implementation was sometimes problematic,” Pelata said.

Pelata interview with Reuters Financial TV

When this is recession number seven for you, the state of the economy begins to drop into perspective — even if the pain is still real.

The chief financial officer of Corning glass, James Flaws, told the Reuters Global Technology Summit in New York that he read from the 158-year-old company’s official history and drew on his own experience to explain to younger managers what these downturns mean.

The first lesson is that economic predictions are hard.

“We don’t have an economist. We used to have one and he predicted eight out of the last four recessions,” Flaws said with dry humor.

The second lesson is that — at least at Corning — things have been tough before. This year, all merit increases were frozen.

“I actually worked here in the ’80s when we cut everybody’s pay,” he said. And during the recession of 1975, shortly after he joined the company, the company fired 25 percent of its management.

“Unfortunately they did that on a Friday night. It was really bad,” he said.

He touched on recessions in the 1990s and the tech crash of 2001, but said that this recession seems most to him like that of the early 1980s — which until now was always described as the worst downturn since the Great Depression of the 1930s.

“That was a classic W,” he said in reference to the use of a letter to describe the roller coaster economy of the early 1980s.

“It was like this and then about six months later you had the second one. It was very widespread. Unemployment climbed above 10 percent and affected a lot of different industries.”

Flaws said that he is not predicting that this will be a double-dip recession — but his company is preparing, just in case.

Standby for more trouble ahead in west European car markets. Emmanuel Bulle of credit rating agency Fitch told the Reuters Auto Summit in Paris that sales in West Europe were down only 5 percent from their peak while historically the downturn went to minus 20 percent.
“The slowdown in France started only 6 months ago and we won’t see a real downturn until 2009,” he noted, while the German market seemed more resilient but that was based on a relatively negative performance in 2007. Spain is falling on property worries which have led customers to postpone buying a car.

Customers also await new tax rules on polluting cars and the development of second-hand values for cars with ‘old’ technology.
Bulle said that in West Europe some 80 percent of cars were sold on credit and some 20 to 30 percent via the financing operations of a carmaker. If the credit crisis would make refinancing for these ‘captive’ lenders difficult and they would need to stop contracting new loans, carmakers could lose a fifth of their sales.

Domestic new car sales declined to 4.41 million units in August 2008 from 5.05 million units a year ago. Monthly imports of new cars have remained more or less stable. - Datastream and Thomson Reuters Proprietary Research

A slowdown in U.S. construction, tight credit market conditions and weak consumer confidence have contributed to the overall slump in U.S. auto market over the past three years. Many analysts believe the industry will not see significant recovery in 2009.  — Datastream and Thomson Reuters Proprietary Research