Due to cost-cutting measures such as renegotiation of union and supplier contracts, the "breakeven point" for the domestic automotive industry will decrease by more than 2 million units when comparing current industry conditions to those forecasted in 2010, according to Gary Dilts, senior vice president of U.S. automotive at J.D. Power and Associates.

Significant declines in the auto industry have resulted in lost sales volume of more than 7 million units between 2000 and 2009. This sales volume decrease amounts to a reduction of $175 billion in net revenue, which is equal to the combined U.S. revenue of Ford and General Motors in 2007. As a result, automakers have streamlined operations and otherwise reduced costs, which has led to J.D. Power and Associates' downward adjustment of the breakeven point.

Dilts also provided the following insights about the near-term future of the automotive industry:

- Approximately 180 new vehicle models will be introduced within the next three years, which will require a $100 billion investment. In addition, J.D. Power and Associates is now monitoring the critical OEM financial metrics of each vehicle launch through our recently introduced Financial Launch Index (FLI).

- Digital media buys will comprise 22 percent of automotive advertising by 2011, increasing from 7 percent in 2008. More creative methods of marketing will need to be demonstrated, requiring more effort than ever seen in the past.

- Technology in new vehicles will continue to increase, and customers will demand that these technologies are easy to understand and use.

- A strengthened emphasis on fixed operations - including service and parts visits - will be demonstrated within the next year. Service departments will need to make a renewed effort to build satisfaction and loyalty in order to retain customers.

- Dealerships will have a stronger process focus. Within the next 18 months, OEMs and dealer groups will be instituting programs and branding to increase the value perception for their retail operations.