We ended 2008 with a shriveled market in comparison to the robust volume we began with at the start of the year, but at that time it seemed as though formerly distraught investors were hedging their bets by relying on “value” exchange traded funds (ETFs).

There are 10 broad-market “value” ETFs and 10 broad-market “growth” ETFs with Barclay’s iShares, Powershares, and Vanguard being the more prominent fund families, writes Gary Gordon for ETF Expert.

Two years ago, over 16 million light vehicles were sold in the US. Last year, the number was only 13 million. The sales rate for last month, based on the numbers reported yesterday, was below 10 million vehicles on an annualized basis.

So, what is the new normal for domestic car sales? It ain't 16 million.

With a deepening recession, what was once unimaginable is not imaginable. Car sales in the US may not recover for years. According to The New York Times, "The historic collapse of the new-car market dragged on in December, raising questions of whether the auto industry will ever again have sales levels that it took for granted just a few years ago."

A close look at those numbers is worthwhile particularly since the estimates that The Big Three gave Congress are based on an annual US sales rate of over 12 million vehicles a year. The cuts in expense they are proposing are built around on the assumption that they will be able to break-even at that level once their restructurings will be behind them.

If a car or truck has an average price of $25,000, each million sales lost in a year takes $25 billion out of the market. If 2009 figures come in at 10 million, the market will be $50 billion short of Big Three estimates. In other words, their restructurings will not be nearly enough, and their need for federal money will be much, much greater than has been anticipated.

Put anther way, the present bailout plans don't even scratch the surface of the capital the industry needs.

Douglas A. McIntyre is an editor at 247wallst.com.

What if 10 million vehicles sales in the new normal? originally appeared on BloggingStocks on Tue, 06 Jan 2009 04:19:00 EST. Please see our terms for use of feeds.