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Car sales plummet - sign of a weakening economy
Posted by: McQ on Wednesday, July 02, 2008

This comes as no particular surprise, and, it is effecting all car manufacturers:
Sales of new cars and trucks plunged to their lowest level in more than a decade in June, as high gas prices and a weak economy kept American consumers away from dealer showrooms.

With the drop last month of more than 18 percent, automakers now expect to sell well below 15 million new vehicles this year, far fewer than the norm this decade of more than 16 million vehicles a year.

Detroit automakers were hit hard. Ford Motor was down 28 percent in June, General Motors was off 18 percent, and Chrysler dropped 36 percent.

Despite its sharp decline, G.M’s results were better than expected, which industry analysts attributed to a sales blitz with offers of zero-interest, long-term financing deals. The cut-rate loans helped G.M. retain its historic position as the top-selling United States automaker over Toyota, whose sales fell 21 percent.
People are delaying buying large ticket items as they wait to see how the housing situation and the job situation settle out. You don't have to be an economist to understand that high fuel prices are going to effect everything, and as the economy adjusts to the situation, there is going to be turmoil. That turmoil is going to come in the form of cuts in headcount, cuts in output and increases in costs and prices.

As for the car manufacturers, if they haven't already given up on the large, inefficient vehicles and begun emphasizing smaller more fuel efficient vehicles, someone needs to take them to the woodshed. And that someone will - the consumer - by rewarding those who figure out the trend and act on it.

So if sales continue to fall for some manufacturers and begin to pick up for others, shed no tears for those who are losing out - it will be because they didn't heed the signs and weren't adaptable enough to take advantage of them.
The consumer shift toward smaller vehicles reflects their broad concerns about gas prices and the overall economy, said James Lentz, Toyota’s top sales executive in the United States.

“There are so many things weighing on the consumer’s mind today,” Mr. Lentz said. “It has driven consumer confidence down to a low we haven’t seen since the oil embargo in 1973.”
I'll be interested to see if American manufacturers learned their lesson then and are actually consumer driven this time rather than manufacturing driven.
 
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I would argue they ARE in fact consumer driven, and have been so, all along. Consumer demand for Altoids boxes on wheels has simply not been there, and so they didn’t get built.

Couple that with the idea that even with prices for fuel being what they are just now, for most people, the savings in fuel costs don’t come even close to outweighing the cost of a new payment book for a smaller car, which traditionally do not outlast such payment books, and the demand STILL isn’t going to be there. The American consumer isn’t quite that stupid.
 
Written By: Bithead
URL: http://bitsblog.florack.us
Addendum:
I would back what I say above with the results of a poll released just yesterday by Pew Research:

Amid record gas prices, public support for greater energy exploration is spiking. Compared with just a few months ago, many more Americans are giving higher priority to more energy exploration, rather than more conservation

I say again, automakers already ARE responding correctly to the market. When, of course, government allows them to.
 
Written By: Bithead
URL: http://bitsblog.florack.us
Sorry, forgot the link.
My bad.
 
Written By: Bithead
URL: http://bitsblog.florack.us
As for the car manufacturers, if they haven’t already given up on the large, inefficient vehicles and begun emphasizing smaller more fuel efficient vehicles, someone needs to take them to the woodshed. And that someone will - the consumer - by rewarding those who figure out the trend and act on it.
What an automaker produces doesn’t change on a dime. And up till gas was $3.50ish or more consumers held back car purchases in general and there was no heavily skewed shift to small cars.

Only along with the recent political attention on the price have consumer purchases changed dramatically and only after a collapse in the resale value of SUVs.

And when environmentalist say, ’serves them right for not making fuel efficient cars 10 years ago’, if they had they’d be out of business right now. Automakers work on what customers want today. They can try to predict future demand trends but only to a limited extent. Being late to the party is better than throwing a party and having no one show up when there’s billions of dollars of investment involved.
 
Written By: jpm100
URL: http://
As for the car manufacturers, if they haven’t already given up on the large, inefficient vehicles and begun emphasizing smaller more fuel efficient vehicles, someone needs to take them to the woodshed. And that someone will - the consumer - by rewarding those who figure out the trend and act on it.
The manufacturers will react when the consumer finishes knee-jerking one way or the other.

I remember the original "Oil Crisis" of the 1970s. I was driving down the interstate and there was a huge billboard along the highway celebrating "Oldsmobile - Your Large Car Headquarters". In the background of the Billboard, there was a beautiful woman drooling over a huge Olds ’88. A man was on a ladder pasting a paper over the word "Large" - it was "Small". Nothing else changed. And for the most part, neither did Detroit.

Oh, they came out with some real winners supposedly to fight the gas war. (Remember the Vega?) But instead of fighting the gas wars, they slowly transitioned their production to European-type sedans - forced to do so by the success of the European and Japanese automakers who were beating them off the production lines - at least until the SUV and the Mini-Van made their appearance and the American public became infatuated with 4-Wheel Drive.

The same will be true today. A flood of 21st Century Vegas will flood the market - hurriedly conceived and marketed to fight the current gas war. People will slink back into the showrooms and buy their conscious-driven green vehicle of unknown origin - the only redeeming factor being a gas mileage rate of 35+ per gallon - and with their guilt assuaged they can face themselves in the mirror once again. Will anything have been changed - No.

And by that time the Democrats will still be wondering what to do.
 
Written By: SShiell
URL: http://
Steel has gone up 50%+ this year. I think smaller lighter cars would be smart from a cost perspective as well as a fuel economy perspective.
 
Written By: Harun
URL: http://
I remember the original "Oil Crisis" of the 1970s. I was driving down the interstate and there was a huge billboard along the highway celebrating "Oldsmobile - Your Large Car Headquarters". In the background of the Billboard, there was a beautiful woman drooling over a huge Olds ’88. A man was on a ladder pasting a paper over the word "Large" - it was "Small". Nothing else changed. And for the most part, neither did Detroit.

Oh, they came out with some real winners supposedly to fight the gas war. (Remember the Vega?) But instead of fighting the gas wars, they slowly transitioned their production to European-type sedans - forced to do so by the success of the European and Japanese automakers who were beating them off the production lines - at least until the SUV and the Mini-Van made their appearance and the American public became infatuated with 4-Wheel Drive
Long story short.

It takes 5 years to bring a new car to market. Autocompanies are only changing their line-ups by about 20% or less every year. And much of that work builds on pre-existing or legacy designs.

They don’t have the resources to change their entire line up and they can’t do it in a year if they did.

So timewarp to the 70’s, where the Peanut farmer just straddled the US automakers with the trinity of requirements for safety, emission, and fuel economy. The fuel economy was sort of moot, but added a layer of bureaucracy that actually made leaving some large cars large the better option in some cases.

The safety standards introduced rewarded lighter vehicles. For a given car and given powertrain, its relatively straight forward to improve Fuel economy or Emissions but not both. The only way to improve both, without invention which you can’t be planned for, is to get smaller cars.

The new requirements were custom made for many of the cars the Japanese were already making for their market.

The US makers has to rush product to market that wasn’t really ready and then had to deal with the legacy of product it rushed to market and deal with the quality issues of that era. Which put it in catch up mode all the way into the mid-80’s.

While trying to get a handle on things, the move to europeans style sedans was again another instance of someone else having the product already being made for other markets that could satisfy the changing wants of car consumers.

With SUV’s, the US makers got their turn of already having product the others weren’t making. In part, allowing US dominance of that market.
 
Written By: jpm100
URL: http://
I think you give US carmakers too much credit. Building automobiles is not, to use a cliche, rocket science. Also, foreign manufacturers were making big inroads in the US market long before Carter, Volkswagen, for example; "By 1955, 30,928 registered Beetles were in the US. That number grew to 191,372 by just 1960"*. Fiat, Triumph, English Ford, Mercedes, Citroen, Volvo, BMW, and many others were selling cars of all sizes here in the 60’s, from the 1 cylinder 13 HP BMW Isetta 300 on up. The only reason the Japanese weren’t here also is because they just didn’t have anything to sell. There has always been a market here for small cars, but they aren’t as profitable as big cars, so the Americans decided they would not compete in that market; they would skim the cream and leave the dregs for the foreign companies. There were also quality issues, which is a big reason the Japanese ate the lunch of American producers.



*http://www.angelfire.com/ab6/vwhistory/
 
Written By: timactual
URL: http://
So, do you REALLY want to ride in a smaller, lighter car?
 
Written By: Bithead
URL: http://bitsblog.florack.us
"So, do you REALLY want to ride in a smaller, lighter car?"

Depends. Do I have to drive it in Michigan where practically no one can even make a decent left turn? It’s not safe here, now. OTOH, if you forced all those who currently show a marked inability to drive well into smaller, lighter cars at least when they hit me it wouldn’t do so much damage.
 
Written By: jorgxmckie
URL: http://

 
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