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Deity
of naught
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Aug 2001
time: 17:51
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http://money.cnn.com/2008/10/01/new...sion=2008100120
quote:
U.S. auto sales plunge
Sales sharply lower across industry as automakers, experts say credit squeeze, customer worries led to sharp drops in sales.
Last Updated: October 1, 2008: 8:10 PM ET
NEW YORK (CNNMoney.com) -- Sales at the nation's top automakers fell sharply in September, as tighter credit for buyers and dealers combined with high fuel prices resulted in industrywide U.S. sales falling below the 1 million mark for the first time in more than 15 years.
The sales declines were broad based, with Japanese automakers reporting the same kind of double-digit declines that hit U.S. brands earlier this year when the record gasoline prices sent buyers scurrying from SUVs and pickups to more fuel efficient car models. Overall Asian brands saw a 31% drop in sales, more than the 24% drop among traditional domestic brands.
This time it was the credit crisis, not just gas prices, that cut into sales. Many buyers were unable to get the credit they needed to buy a car and a growing number of dealers saw their own credit cut off, causing widespread failures.
Add to that general nervousness about the economy and the industry was poised to sell fewer than a million cars in the United States for the first time since 1993. And auto executives say they don't think they've seen the bottom yet.
Overall industry sales toppled 27% to 964,873 vehicles, according to sales tracker Autodata, a level not seen since February, 1993. It was the biggest year-over-year drop in sales since January 1991, as the nation prepared for the start of the first Gulf War and experienced a gasoline price shock.
George Pipas, Ford's director of sales analysis, said the company estimates that industrywide sales to consumers were down slightly more, a 30% compared to last year, although a more narrow decline in fleet sales to business clients such as car rental companies limited the overall percentage drop.
Industrywide sales of light trucks, such as pickups, SUVs and vans, edged ahead of cars for 50.3% of industrywide sales. It marked the first time since March of this year that trucks outsold cars. But demand for both types of vehicles plunged from year-earlier levels with truck sales off 31% and car models down 22%.
Pipas said that sales, as well as traffic in showrooms, were down even more sharply the last 10 days of the month as the economic crisis got more and more attention.
"There are customers who are adopting a wait and see attitude," he said. "When the Dow falls 777 points [as it did this past Monday], I can assure you there weren't many people closing on a car or an HD TV or a home for that matter."
Market research firm CNW Research, which has tracked dealership traffic for 22 years, confirmed Pipas' view. The firm's reading on traffic in showrooms for the end of September was the worst it has ever reported, down 50% compared to a year earlier.
"Manufacturer incentives aren't pulling in the crowds. Dealer 'blow out sales' aren't working. And without showroom traffic, it's tough to sell anything," said Art Spinella, president of CNW.
Tom Libby, senior director of industry analysis for J.D. Power & Associates, said that even though the problems facing automakers in September were well known, the final numbers were "shocking."
Libby said it's now clear that credit market problems have become the greatest headwind for auto sales as buyers would need to pony up more cash if they really want a car.
"Who's going to put down $25,000 or $30,000 in cash right now? That explains a lot of this," he said.
GM, down 16%...but beats forecasts
General Motors (GM, Fortune 500) reported that sales of cars and light trucks dropped 16% from a year ago. That was better than the forecast of a 24% decline from sales tracker Edmunds.com but it was still clearly a sign of weaken demand.
Still GM executives said they were pleased with the results.
"September marked the second consecutive month where GM performed extremely well in tough market conditions," said Mark LaNeve, the GM vice president in charge of North American sales.
Sales of GM's cars fell 10% while sales of light trucks - such as pickups, SUVs and vans - declined 19%.
More pain at Toyota
Toyota Motor (TM) reported that its sales toppled 32% from a year earlier. The forecast was for an overall drop of only 18%. It was the sharpest percentage drop in U.S. sales for the Japanese automaker in 21 years.
Sales of cars dropped 28% and light truck sales plunged 38%.
After years of steady gains that made it No. 2 in terms of U.S. sales, Toyota has now had year-over-year declines in U.S. sales in all but one month since last December.
Ford, Chrysler sales down by a third
The news was just as bad at Ford (F, Fortune 500) and Chrysler LLC.
Ford reported that U.S. sales tumbled 35% from a year earlier. The forecast had been for only a 25% drop.
"Consumers and businesses are in a very fragile place," said Jim Farley, Ford group vice president. "An already weak economy compounded by very tight credit conditions has created an atmosphere of caution."
Privately-held Chrysler LLC, which includes the Chrysler, Dodge and Jeep brands, posted a 33% decline, as light truck sales tumbled 34% and car sales dropped 29%.
Sales of virtually every model of car and truck at the two U.S. automakers fell by more than 10%. Among the exceptions where the Chrysler and Dodge minivans and Ford's Crown Victoria and the Lincoln Town Car. The latter two were helped by fleet sales.
Sharp drops at Honda, Nissan
Honda Motor (HMC) posted a 24% drop in U.S. sales, far worse than the 6% drop forecast by Edmunds. It was the worst drop in Honda's sales since 1981, and a sign that good fuel economy is no longer enough to buck broad industry declines.
Earlier this year, Honda was able to steal market share by touting its more fuel-efficient cars as gas prices kept rising. Sales actually rose from January through July
But September marked the third straight month of sales declines for Honda. Overall sales for the year are now lower than a year ago.
Nissan (NSANY) posted a 37% drop in sales, far worse than the forecast of a 12% decline.
First Published: October 1, 2008: 12:12 PM ET |
The problem is that the number of people who would or could put down $25K or $30K is very small.
Auto dealers are going out of business because the usual buyers can no longer borrow to buy, and their sponsors can no longer lend irresponsibly to people who have dim hopes of paying off.
Auto dealership job losses, with others who can no longer do business selling to habitual borrowers, will feed back into themselves.
People who have large stacks of cash are not likely to be rushing out to spend it frivolously, as habitual borrowers were want to do with their credit cards. After all, that is not how you come by a large stack of cash to start with.
Where is the bottom?
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Deity
Carnegie Mellon, Pittsburgh, PA
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Feb 2001
time: 19:51
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It's not obvious to me that fewer car purchases are actually a bad thing.
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Deity
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May 1999
time: 18:51
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Same.
I was at the dealership yesterday getting my battery replaced, and some of the people there were complaining about this very issue.
JM
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Emperor
Up in the Ayers
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Oct 2002
time: 16:51
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Then perhaps new cars can drop to a more affordable level. When cars drop 80 percent of their value in the first two years, that tells you everything you need to know about new cars.
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Deity
of naught
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Aug 2001
time: 17:51
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quote:
Originally posted by Kuciwalker
It's not obvious to me that fewer car purchases are actually a bad thing. |
It's not the decrease in car sales, it's the sudden fall and losses as dealerships start closing.
The spin offs of the credit crunch could go way beyond what most people have been thinking.
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Prince
State Of Denial
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Apr 2007
time: 18:51
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quote:
Originally posted by Ben Kenobi
Then perhaps new cars can drop to a more affordable level. When cars drop 80 percent of their value in the first two years, that tells you everything you need to know about new cars. |
Actually, I think it says more about the culture of "new is good" and conspicuous consumption than about the cars themselves. Though certainly, the quality of the vehicles does come into play.
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Emperor
Ontario, Canada
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Nov 1999
time: 19:51
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quote:
Originally posted by notyoueither
It's not the decrease in car sales, it's the sudden fall and losses as dealerships start closing.
The spin offs of the credit crunch could go way beyond what most people have been thinking. |
More car factories close or layoff. No need to make what isn't selling. The slow down in US housing hurt the truck plants here.
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Deity
Lurking occasionally
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Mar 2003
time: 16:51
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quote:
Originally posted by Zkribbler
Vere did dat "every year" kum frum? I did nut zay "every year." Who sed "every year?" |
Mi carz 18 yrs old. I has gas.
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Deity
of naught
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Aug 2001
time: 17:51
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quote:
Originally posted by Wezil
More car factories close or layoff. No need to make what isn't selling. The slow down in US housing hurt the truck plants here. |
It's houses yesterday, cars today, and the rest of the economy tomorrow.
Sock your cash away. Very few jobs are safe.
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Emperor
orangesoda
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Nov 2001
time: 17:51
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This is how it's designed to work. Boom on consumer debt spending... bust when no one qualifies anymore. (Via a combination of overpriced assets and consumers who are up to their eyeballs in debt trying to keep up with them.) Now is sorta the wrong time to be acting, it will play out one way or another, until there is real capitulation in the markets and through our economy... and most people have marked down their assets to the new "affordable".
Funny thing is how our (predominantly) "Christian" nation misses out on virtually every lesson taught in the Bible, in this case, with Joseph interpreting Pharaoh's dreams.
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Emperor
of munchkind land
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Jun 2002
time: 00:51
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Yup. Lets stop spending more than we're worth. Banks included.
700Billion though says we can keep doing it!
Yaay!
We are so screwed.
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Deity
of naught
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Aug 2001
time: 17:51
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quote:
Originally posted by Aeson
This is how it's designed to work. Boom on consumer debt spending... bust when no one qualifies anymore. (Via a combination of overpriced assets and consumers who are up to their eyeballs in debt trying to keep up with them.) Now is sorta the wrong time to be acting, it will play out one way or another, until there is real capitulation in the markets and through our economy... and most people have marked down their assets to the new "affordable".
Funny thing is how our (predominantly) "Christian" nation misses out on virtually every lesson taught in the Bible, in this case, with Joseph interpreting Pharaoh's dreams. |
I don't think this is how it was designed to work.
Are you seriously suggesting we use the Bible for economic planning?
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Emperor
orangesoda
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Nov 2001
time: 17:51
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quote:
Originally posted by notyoueither
I don't think this is how it was designed to work. |
You don't?
Perhaps not originally, but money is power... and those with power have been shaping our economy and politics to suit them.
The expansion and contraction of the market helps them. During the expansion they can sell off their assets at high prices. During the contraction they can buy back the assets (or seize them even) at minimal expense.
Then they're set for the next expansion. Sure there are casualties (even among the powerful) as no one can predict when it will turn exactly, and certainly everyone makes mistakes... gets [un]lucky... but it's obvious that some people (even among the lower classes) can make out very well in the end if they've set themselves up for the contraction properly.
It's JPM buying out other firms for pennies on the dollar. Or even getting the Fed to back the buyout. (Or having the Fed lend to them on the assets.) And who set up the Fed in the first place? JP Morgan. Now it's getting the US Gov to buy those assets for face value. Who's in charge of this and was calling for it? Paulson. Who just happens to have been the CEO for GS. But it's also smaller investors who have been in cash (so many people being in cash is one of the reasons for the contraction even), who will be able to buy up assets... stocks or houses or whatever... for much cheaper than they would have otherwise.
It's not a massive conspiracy. But it's certainly a bunch of people working for their own best interests, and gaming the system ... and in some cases even setting up systems ... for their own profit.
quote:
Are you seriously suggesting we use the Bible for economic planning? |
I'm saying it's rather ironic that a predominantly "christian" nation fails to understand some of the applicable concepts that are taught in the bible.
Joseph's interpretation of Pharaoh's dream was that there would be 7 fat years, followed by 7 lean years. To plan for this, the excess of the fat years was saved to provide during the lean years. This worked out well. (Whether it happened or not is really not important, it's the principle of using excess to guard against the lean years that matters.)
We go about this backwards. Fat years we consume to excess, leaving little (or less than nothing actually... since we go into debt) to get us through the lean years.
The Bible isn't an economic road map, but there are applicable concepts within it. If we actually understood them, at least we wouldn't make mistakes that are easily known to be mistakes... so much so that peoples thousands of years ago could recognize the expediency of the precautions we ignore.
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Deity
of naught
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Aug 2001
time: 17:51
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Those are interesting ideas. Do some digging and put up a web site. You'll get lots of views, I'm sure.
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Deity
Lurking occasionally
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Mar 2003
time: 16:51
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quote:
Originally posted by notyoueither
I don't think this is how it was designed to work.
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They didn't design the market to fail, but then they didn't expect it to either. Now you can expect them to be stupid one time, but not continually like this. Then you have to assume that they are designing it to fail.
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Dauphin
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Deity
bringing pastry back!
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Jan 1970
time: 01:51
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quote:
Originally posted by Provost Harrison
It wasn't a certain chubby Australian was it?  |
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