Since the automobile's inception in the late 1800's in the United States, the country has been the single largest consuming market thanks to the colossal domestic producers GM, Ford, Chrysler and others. In many ways, cars were what defined the American consumer in the 20th century and were the backbone of the nations rise into the economic powerhouse it is today.

However, 2009 marked a historic shift in the automotive world. During the first half 2009, for the first time ever, total auto unit sales in China surpassed those in the U.S. with 6.1 million vehicles, compared 5.8 million vehicles in the U.S. This growth stems from a consumer response to government measures implemented in early 2009 to boost car sales, which included a successful economic stimulus package, subsidies and a cut in taxes on auto purchases. China's vehicle market has exploded in recent years, and has already overtaking Japan in 2006 to become the world's second-largest by annual sales and is expected to complete 2009 as the world's largest automotive market.

Worldwide Monthly Automotive Semiconductor Sales

In response to a rapidly declining market, the U.S. government has implemented several programs to boost new car sales, most notably of which is known as the "Cash for Clunkers" program, or its official name, the Car Allowance Rebate System (CARS). CARS is a federal program signed into law on June 24, 2009 that allocated $1 billion in U.S. funds to encourage consumers to trade in older, less fuel-efficient vehicles for new vehicles that get better fuel economy by providing a credit of either $3,500 or $4,500, depending on the vehicle.

For the most part, the response has been positive thus far, with Congress quickly approving another $2 billion to the program in early August 2009. Supports claim it helps save fuel, clean up the environment, stimulate the economy and bring some stability to an industry damaged by the financial crisis. However, opponents have noted that this has only saddled the government and consumers with additional debt and is only a short term solution to a long term issue.

Despite disagreement over the CARS program, Databeans predicts that the semiconductor market serving the automotive industry is on the verge of recovery in Q3 in a "U" shaped model with several months of near flat revenue, before a gradual increase in 2010. This is fueled primarily by the Asia Pacific region with significant momentum during June and July. After hitting bottom in February 2009, where automotive semiconductor revenue came in at $931 million, there have since been several consecutive months of flat or slightly positive growth. June marked a turning point where momentum begun to gather, while in August, Databeans predicts some nominal growth followed by an even stronger September, after which we expect to see strong recovery moving forward into the first quarter. Overall by the end of 2009, Databeans expects the automotive semiconductor total available market to be just over $15 billion, thanks to emerging markets in Asia and recovery in established regions such as the U.S. and Western Europe.

About Databeans, Inc.

Databeans, Inc., headquartered in Reno, Nevada, is an internationally recognized market research firm focused on the semiconductor and electronics industry. Databeans publishes over 50 market research reports annually that are available for purchase as individual studies, or bundled together in cost-saving subscription services. Databeans' detailed quality studies, industry leading customer service, and unparalleled responsiveness are unmatched in the electronics market research industry. For more information, visit www.databeans.net.