In its recently released California Auto Outlook, the California Motor Car Dealers Association made a most lofty prediction by 2009, it expects the state’s automotive industry to rebound from its sales slump. One reason for the prediction is that the gap in sales between last year and this year is narrowing. In the first quarter of 2007, sales were down by 7 percent, compared to the same period in 2006. By this year’s fourth quarter, however, sales are projected to decline only 2.7 percent, compared to the same period last year. Notwithstanding an unforeseen crisis, CMCDA President and CEO Peter Welch stands by his organization’s predictions. “Well, first of all, this is all crystal ball stuff,” he admitted. “The housing market and economy could get worse, but we don’t think so.” Welch also believes there will be a turnaround in the state’s automotive market because of California’s rapidly expanding population. Moreover, record numbers of new drivers are predicted to hit the road, which will result in new car purchases, he believes. Lastly, the people who have been holding onto their cars rather than buying new ones will, before long, have no choice but to replace them. “You can only fix a used car so many times,” Welch said. “Then, you have to replace it.” Despite such auspicious predictions, CMCDA found that California’s decline of 8.8 percent in new light-vehicle registrations for the first nine months of this year was far steeper than the national total of such registrations, which suffered a decline of just 2.8 percent. A primary reason the California auto market has taken a bigger hit than the overall U.S. market is because the housing crunch has taken more of a toll here, Welch said. “The impact of the housing market is more severe.” Another reason for the discrepancy in total decline is that when the market was up, California dealers were selling more cars than in the rest of the country. All was not bleak for the California auto market during the first nine months of this year, however. “We’re still looking at very robust car sales,” Welch said. “We’re still on target of moving 1.9 million new car units this year.” Moreover, sales of certain types of vehicles have actually increased. While sales of full-size and mid-size SUVs in the state declined by nearly 4 percent in the third quarter from a year earlier, sales of compact SUVS and mid-size crossover SUV segments rose by 1.7 and 1.1 points, respectively, CMCDA found. Audi, MINI and Jeep registrations increased by more than 10 percent in the first nine months of 2007. Furthermore, luxury brand market share has steadily increased since 2004, this year experiencing its largest increase at 20.7 percent. “The well-heeled Californian still has a lot of disposable income,” Welch said of this trend. End of the year sales will be telling in terms of luxury brand sales. “A lot of people get heavy bonuses at the end of the year and go out and get a car,” he said. Japanese and European brands also continue to post market share gains, CMDA found, with Toyota gaining the most market share thus far this year, up 1.8 percent, according to CMCDA. Toyota, however, slipped from first to fifth place in Consumer Reports’ annual reliability survey, the results of which were released Oct. 16. Welch was doubtful that the survey results would make a major impact on Toyota sales. “The domestic manufacturers in particular are making great strides in the quality of their vehicles,” he said. “Toyota had been on such a high precipice for their quality control. I think some of their competitors are basically just catching up with them.” Welch added that, because Toyota has introduced an exceptionally large number of new lines and models, the automaker is likely enduring what he called “a little shakeout period.” Despite distinct gains, CMCDA predicts auto sales to continue to decline in 2008. But Welch doesn’t believe this is cause for panic. What’s happening in the auto market is not unique, he said. “We’re seeing this at Wal-Mart, clothing stores, pretty much across the board,” he said. “When there’s uncertainty, people don’t commit themselves to a $20- or $30- or $40,000 new car.”