On Thursday, Standard and Poor dropped their ratings for the big three automakers, GM, Ford and Chrysler. David Wyss, chief economist for Standard and Poor, said “The outlook for the auto industry has worsened considerably since the beginning of the year as the weakness in the housing market has extended into the rest of the economy”.

Analysts are estimating a 12 per cent revenue decline for automakers this year when compared to last and the largest driving factor for the decline is the price of fuel. Consumers are driving less and buying smaller cars, as the uncertainty of the economy has led them to conserve financially as much as they can. According to Standard and Poor, May saw ‘miles driven’ decrease by 9.7 billion from a year ago. This is apparently the strongest decline since just after 9/11.

The dismal forecast for the automakers will undoubtedly affect all advertising mediums that once depended heavily on automotive advertising as a source of revenue. Dealers and OEM’s will look for more affordable and targeted advertising sources, to both lessen costs and the width required to reach perspective car buyers. The mediums that will succeed during this turbulent time will be those that change and shift their ad products to align with the market factors. This will be increasingly difficult for local publishers as their ability to adapt and change revenue models and flexibility, is less of that of the pure play online mediums. To survive the auto advertising pressures, local publishers will have to release all that they once knew as rule of thumb for auto advertising and do so quickly.

written by Beverly Crandon