If they fail to anticipate a high sales year, they will not be able to provide good customer service by having the product that the consumer needs, when they need it. They may lose even further sales using this tactic. If they forecast sales too high, they will run into higher production costs, and may risk losing money. Production requires capital and if companies do not realize a return on their investment then they may run the risk of losing production money spent. Decisions regarding production levels are one of the most important decisions that a company can make if they wish to remain solvent into the future. The tax rebates and the economic stimulus plan, mentioned in the market report may be a factor for some consumers in the buying decision. However, in order to make an accurate forecast, one must look at the other variables that surround the topic and how much influence they have on consumer buying decisions. We discussed consumer credit and its impact on future sales.

Gas prices continue to climb and there is considerable uncertainty as to how far they will go (Vlasic, 2008). Uncertainty of this type is always bad for consumer spending. In addition, as gas prices continue to climb, the types of vehicles that consumers buy could be expected to shift as well. It was expected that hybrids would take off as gas prices began to climb, but the start was not as vigorous as expected (Vlasic, 2008). Gasoline prices have not reached the threshold for many people that would be required to justify the expense of buying a new hybrid car. However, if gas prices continue to climb, it would seem logical to increase production of hybrids and more fuel efficient models, while cutting back on less fuel efficient models of the past. However, this is only speculative and based on reason, rather than numbers. There have been cases where analysts were wrong and consumers did something different...

Only time will tell if this is the case at the present time.
Conclusion

It is clear from the market research report that manufacturers are optimistic in their projections of consumer spending for the rest of 2008. If one only considers the tax rebate as a relevant factor in consumer buying decisions, then it would be easy to paint a rosy picture for the rest of the year. This would lead to a decision to boost production for the rest of the year. However, if one takes a more realistic look at the situation and takes other factors such as the economy and rising gas prices into consideration, then the outlook does not look good for sales during 2008. this would lead to a decrease in production for the remainder of the year.

Whether consumer sales of automobiles recovers for the remainder of 2008, remains steady, of continues to fall, manufactures stand to lose money either way. If they overshoot their projections then they stand to lose in operating costs that will not be recovered. If they are too low in their predictions, then they stand to lose in lost sales. Considering the existence of conflicting information from other sources, and the general state of the economy, it is not recommended that this market report be used for forecasting future automobile trends. A more conservative approach should be used in forecasting production levels for the remainder of the 2008 model year.

References

Labia, P. (2008) CNBC - Driving into the New York Auto Show. Behind the Wheel. CNBC. Retrieved March 26, 2008 at http://video.msn.com/?mkt=en-us&fg=rss&vid=269d9ac2-2433-4c6e-ac13-de63fd17db65&from=34

Vlasic, B. (2008) Dismal Year Is Forecast for Car Sales. March 20, 2008. New York Times. Business. Retrieved March 26, 2008 at http://www.nytimes.com/2008/03/20/business/20auto.html?_r=1&oref=slogin