Ripplewood’s Stallkamp: Flat 2009 U.S. Auto Sales

DETROIT (Reuters) – A top private equity investor and former top Chrysler executive said on Monday that the U.S. economy is in recession and the automotive market will not begin its recovery until 2010.

Tom Stallkamp, an industrial partner at New York private equity firm Ripplewood Holdings and former Chrysler president, said it was unclear if a bottom in the U.S. financial sector had been reached, citing the Lehman Brothers Holdings Inc (LEH.P) bankruptcy and Merrill Lynch & Co Inc (MER.N) takeover.

“It’s still not clear when the bottom has hit,” he said at the Reuters Autos Summit in Detroit. “The question is can you finance anything right now? It’s going to be a few more months to get through the bottom of this.”

The U.S. economy is in recession, but there should not be a global depression next year as the United States stabilizes, Stallkamp said.

The availability of credit is a problem, while raising capital is very hard to do, he said. It will be “another year of turmoil,” he said, adding the consumer credit markets could suffer in the aftermath of the financial sector’s struggles.

Stallkamp said it would be 2010 before the U.S. auto sector recovered, predicting 2009 U.S. vehicle sales in the range of 13.8 million to 14 million. On pace for sales of around 14 million this year, the U.S. auto market could hit a 15-year low.

“It’s going to be hard to get to 14 (million),” he said of next year’s sales. “Fuel is still scaring people.”

Next year will be a “telling point” on whether all of the three U.S. automakers — General Motors Corp (GM.N), Ford Motor Co (F.N) and Cerberus Capital Management affiliate Chrysler LLC — will survive, he said. For Chrysler especially, it will be a “pivotal year” in its effort to remain independent.

Chrysler needs a capital injection, a source for advanced technology and a link with a company that has greater international exposure, he said.

Controlled by Cerberus since 2007, Chrysler has seen sales drop 25 percent this year while it works to slash thousands of hourly jobs in an effort to reduce costs.

Stallkamp said he expects to see more auto assets available for purchase in the next six months, and consolidation in the supplier sector should continue as more parts makers run into credit problems in the fourth quarter.

He also sees European auto sales slowing further, falling 8 percent the rest of this year and another 5 percent next year.

By Ben Klayman