Sales are being held above water by high incentives spending. Profits are thin or nonexistent.
"You already had an economy that was on life support," said Brett Hoselton, auto industry analyst for Cleveland-based McDonald Investments Inc.
"Consumer spending and consumer confidence were the only things that were keeping the economy aloft, and now consumer confidence will be negatively impacted."
Said Fred Schwab, president of Porsche Cars North America, speaking at the Frankfurt auto show the day after the attacks on New York and Washington, "If yesterday morning it was cool to buy a Porsche, by yesterday evening it was not cool to buy a Porsche."
Several analysts last week cited the impact on sales of the so-called "CNN effect" - people riveted to TV sets instead of buying cars, or much else.
Short-term pain"Can you imagine going out on Tuesday (Sept. 11) and buying a car? I certainly can't," said David Healy, auto industry analyst for New York-based Burnham Securities.
But Healy predicts little long-term impact on auto production. Parts shortages caused by tightened controls at border crossings and by the ban on U.S. air travel have caused rolling shutdowns of several assembly plants.
"My thought would be, a lot of short-term disruption and no long-term disruption," Healy said. "In a couple of weeks or months, maybe, things will be back to normal. It could affect September sales, but it's hard to quantify it."
Healy estimates that the impact of lost production on third-quarter earnings will total in the "tens of millions of dollars, not hundreds, or billions."
Ford Motor Co. is sticking to its 2001 industry sales forecast of about 16.7 million light vehicles, plus or minus 250,000, said George Pipas, sales analysis and reporting manager.
"Your reaction may be, 'What? Surely these events must have a negative impact!' But we are not prepared to make an assessment at this point," he said on Thursday, Sept. 13.
"I think anybody who says they can tell the long-term effect of something like this, in the first 24 to 48 hours after the events, is simply speculating."
Similarly, General Motors has not revised its 2001 forecast, which was already lower than Ford, at about 16.2 million light vehicles.
"We don't know yet what the implications will be," said spokeswoman Toni Simonetti. Steve Girsky, Morgan Stanley auto industry analyst, agrees that auto sales will be hurt by consumers' shaken confidence.
"This is going to hurt. How much is not known," he said. "Consumer confidence was already weakening, even before this happened. The good news is, the Fed will be aggressive on interest rates, and the dollar is weakening."
'Patriotic' to do businessThe dollar fell sharply against other major currencies last week, but rebounded quickly, almost to where it began. A weaker dollar would help the traditional Big 3 brands in the U.S. market, since dollar-denominated profits would be worth fewer yen or euros back home, for Japanese and European manufacturers.
The opposite effect has hurt Big 3 competitiveness this year.
"It's remarkable that the dollar bounced back so quickly," said Van Bussmann, senior vice president of global forecasting at J.D. Power and Associates.
"You would think higher uncertainty, especially for the U.S., might deter investors, but apparently not. I think maybe (the dollar recovered) because it's uncertainty about the whole world, not just the U.S.," he said.
Bussmann also said the terrorist attacks may have the unintended consequence of uniting Americans.
"I get a sense from talking with some people that they almost think it's a patriotic duty to carry on business as normal. I know I did," he said.
"I hung my flag and came to work every day. I'm mad. Other people are saying, 'We're not going to let them disrupt our economy, our strength. Damn it, we're not going to bow down.' "
Automotive News Europe Editor in London contributed to this report