Ford Motor Co. chief economist Ellen Hughes-Cromwick said at an auto industry conference here that the prospects are slim for a recovery that's "V-shaped" -- a steep decline followed by a steep incline.
The steep decline in auto sales was in 2008 and 2009. Recovery will be more gradual, said Hughes-Cromwick at the Automotive Economic Forecast & Financial Forum here on Monday.
Some analysts have said that consumer willingness to buy has become a bigger problem than the sheer availability of loans, but the Ford economist said that despite improvement, both are still shaky.
"It's both demand and supply," she said in a session with reporters. The two-day forum was hosted by the Cherokee Automotive Group of Cary, N.C., publishers of Auto Remarketing and SubPrime Auto Finance News.
Ford forecasts 2010 industry sales of 11.5 million to 12.5 million, including medium and heavy trucks. That would be an improvement over 2009 but still poor by recent standards, she said.
If it weren't for such government support as the Federal Reserve's TALF program -- or Term Asset-backed Securities Loan Facility -- auto loans and leases would be even less available than they are now, Hughes-Cromwick said.
The TALF bought asset-backed securities backed by auto loans, student loans and other categories of loans when the market for asset-backed securities dried up in 2008 and 2009. That effectively froze one of the main ways auto lenders borrow money to originate new loans and leases. The Fed discontinued the TALF after March 2010, when the asset-backed market began to recover.
"If you look where we were 14 months ago, before TALF ... there has been a lot of progress toward support for a nascent recovery," Hughes-Cromwick said. "I say 'nascent' because it has been fairly modest. Don't expect to see a significant run-up."