Double-dip would sideswipe auto industry

[Omaha Steve]

http://www.reuters.com/article/idUSTRE6496TK20100510

(Reuters) - The last recession forced the auto industry to slash costs, shutter factories, tear up contracts and rely on government funding.

Now the what-if question for increasingly bullish investors convinced the worst is behind for the battered sector: What's the industry's playbook for a possible double-dip?

Global auto sales tumbled 13 percent in 2009 to hit a seven-year low in a collapse that forced both General Motors Co GM.UL and Chrysler into U.S.-government funded bankruptcies.

But since the middle of last year bond and stock investors have bet that stronger suppliers like TRW (TRW.N) and survivors like Ford Motor Co (F.N) have turned the corner.

That bullish consensus hinges in part on the assumption of strengthening auto demand in the second half of 2010 in the U.S. market, now the second largest behind China.

"From an auto industry point of view, we are still in a depression," said Jeremy Anwyl, chief executive of auto tracking service Edmunds.com.

Analysts say another downturn could delay or scuttle plans to reduce the reliance of GM and Chrysler on government financing in a blow to the plans of the Obama administration.

FULL story at link.