Automobile industry analysts with Morgan Stanley put forth a bearish outlook for the auto sector on a conference call held last week, forecasting weak cash flows for the first quarter and sluggish global demand.

"It's a challenging time right now, that's very clear," said equity auto analyst Steve Girsky. Girsky added that he expects weak cashflows for the first quarter on the low dealer sales volumes experienced, and as volume declines, a significant amount of cash is used as working capital. "Keep your crash helmet on, folks," Girsky quipped. "Cashflow could look pretty rough in the first quarter." Girsky indicated that this effect could get worse as companies try to raise prices amid flagging sales. The automobile consumer price index has risen steadily over the past four months but purchases have not kept pace.

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