August was yet another tough month for American auto maker Ford Motor Company (NYSE: F) as the company reported today that during the month, U.S. sales were off by a mind boggling 26.5%.During the month, Ford was able to sell a total of 155,172 light vehicles, which was 3.6% below July's figures of 160,990, which was the worst month for U.S. car sales in the past 16 years.
As expected, truck sales really took a beating last month for the company. With consumers dealing with record high gasoline prices, truck sales have been weak for some time now, and last month the company saw truck off by more than 32%. Its car sales fell by nearly 9%.
Looking ahead, the company is not too optimistic about the state of the auto market. Not expecting to see sales rebound any time soon, the company has announced that it will further cut its production by 50,000 over the remainder of the year, lowering total production to 890,000 during the second half of the year.
Not only are they not looking to see the market rebound, they are actually predicting even tougher times ahead for automakers in the months to come. It is hard to imagine how things could get much worse, but it does appear as though that will be the case.
Ford was not the only auto maker to post sales declines last month. American rival General Motors Corporation (NYSE: GM) also had a tough month, with U.S. sales dipping 20.4%. Not quite as bad as Ford's decline, but still a pretty hefty drop. The hard times were not only reserved for American auto makers either last month. Foreign rival Toyota Motor (NYSE: TM) also hit rough waters last month, and posted a drop in sales in the U.S. of 9.4%.
Despite the tough sales reports, all three of the above stocks are trading in the green today, with Ford trading up 0.9%, General Motors is up 5.6% and Toyota is up 0.9%.
What are your thoughts on the auto market? Should we expect to see the current trend reversing any time soon, or are auto makers in for some more tough times ahead?
Michael Fowlkes has worked as a stock trader for seven years and spent the last four years working as an analyst for the online investment advisory service Investor's Observer.
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Reader Comments (Page 1 of 1)
9-03-2008 @ 8:03PM
nathan said...
This sums it up....
A Japanese company ( Toyota ) and an American company (Ford) decided to have a canoe race on the Missouri River . Both teams practiced long and hard to reach their peak performance before the race.
On the big day, the Japanese won by a mile.
The Americans, very discouraged and depressed, decided to investigate the reason for the crushing defeat. A management team made up of senior management was formed to investigate and recommend appropriate action.
Their conclusion was the Japanese had 8 people rowing and 1 person steering, while the American team had 8 people steering and 1 person rowing.
Feeling a deeper study was in order, American management hired a consulting company and paid them a large amount of money for a second opinion.
They advised, of course, that too many people were steering the boat, while not enough people were rowing.
Not sure of how to utilize that information, but wanting to prevent another loss to the Japanese, the rowing team's management structure was totally reorganized to 4 steering supervisors, 3 area steering superintendents, and 1 assistant superintendent steering manager.
They also implemented a new performance system that would give the 1 person rowing the boat greater incentive to work harder. It was called the 'Rowing Team Quality First Program,' with meetings, dinners, and free pens for the rower. There was discussion of getting new paddles, canoes, and other equipment, extra vacation days for practices and bonuses.
The next year the Japanese won by two miles.
Humiliated, the American management laid off the rower for poor performance, halted development of a new canoe, sold the paddles, and canceled all capital investments for new equipment. The money saved was distributed to the Senior Executives as bonuses and the next year's racing team was out-sourced to India .
The End.
Here's something else to think about:
Ford has spent the last thirty years moving all its factories out of the US , claiming they can't make money paying American wages.
TOYOTA has spent the last thirty years building more than a dozen plants inside the US . The last quarter's results:
TOYOTA makes 4 billion in profits while Ford racked up 9 billion in losses.
Ford folks are still scratching their heads.
------------
IF THIS WEREN'T TRUE, IT MIGHT BE FUNNY.
9-05-2008 @ 12:21AM
whtm said...
ANSWERS:
1. Which country can boast that their brands occupy 2 of the top 3
spots for long-term reliability?
Answer: United States.
Per J.D. Power Vehicle Dependability Study, Mercury and Cadillac are
in the top 3, along with Lexus. And in 2007, Buick was tied with Lexus
for the top spot.
http://www.jdpower.com/corporate/news/releases/pressrelease.aspx?ID=2...
2. As of August 2007, which manufacturer had the most recalled
vehicles in the U.S. for that year?
Answer: Volkswagen.
According to Business Week, Volkswagen had the most recalls at this
time a year ago. The second worst was Toyota.
http://www.businessweek.com/autos/content/aug2007/bw20070810_455098.htm
3. Pick the brand from each group that has the highest initial
quality.
a. Answer : Cadillac (better than both Acura and BMW)
b. Answer: Mercury (better than both Honda and Nissan)
c. Answer: Chevrolet (better than Acura, BMW, and Mazda)
This is according to J.D. Powers Initial Quality Survey.
http://www.jdpower.com/corporate/news/releases/pressrelease.aspx?ID=2...
4. Which midsize sedan has the highest initial quality?
Answer: The Chevrolet Malibu has better initial quality than any
competitor, including the Honda Accord, Toyota Camry and Nissan
Altima. The Ford Fusion also beat all 3 Japanese competitors.
This too is from the J.D. Power Initial Quality Survey, which also
reveals that above average are American brands Mercury, Ford,
Cadillac, Chevrolet , Pontiac, Lincoln, and Buick. Below average are
import brands Acura, Kia, Nissan, BMW, Mazda, VW, Subaru, and Scion
(and several others).
http://www.jdpower.com/autos/articles/2008-Initial-Quality:-Midsize-a...
http://www.jdpower.com/corporate/news/releases/pressrelease.aspx?ID=2...
5. Which large sedan has the highest initial quality?
Answer: Again per J.D. Power, the highest quality large car is the
Pontiac Grand Prix, beating the Toyota Avalon. Two other Detroit cars
that beat the Avalon are the Mercury Sable and Mercury Grand Marquis.
http://www.jdpower.com/autos/articles/2008-Initial-Quality:-Midsize-a...
6. Which midsize pickup has the highest initial quality?
Answer: The Dodge Dakota has the best quality for midsize pickups,
proving that Chrysler too can beat the imports. Both the Dakota and
the Ford Ranger beat the Toyota Tacoma.
http://www.jdpower.com/autos/articles/2008-Initial-Quality:-Pickups-a...
7. Which car is the most economical overall?
Answer: Per Edmunds.com, the premier automotive analysis site, the
most economical car in America, taking into account not only mileage
but all costs, is the Chevrolet Aveo. The Honda Fit is #3 and the
Toyota Prius is a distant #34.
http://www.edmunds.com/help/about/press/127806/article.html
8. Which car did the Los Angeles Times describe as a better car
than BMW or Mercedes or Lexus or Infiniti?
Answer: Cadillac makes a better car than BMW or Mercedes or Lexus or
Infiniti, and that car is the 2008 CTS. No other car in the mass
market dares so much as this expressive and audacious bit of
automotive avant-gardism. Dan Neil, LA Times.
http://www.latimes.com/classified/automotive/highway1/la-hy-neil12dec...
9. Which company makes the winner of the 2008 Green Car of the Year
award?
Answer: The Chevrolet Tahoe Hybrid is the winner of this award. How
could a full-size SUV defeat the media darling Toyota Prius? Read the
link below and you will discover, Whats equally eye-opening is that
the Tahoes 21 mpg city fuel efficiency rating is the same as that of
the city EPA rating for the four-cylinder Toyota Camry sedan.
Did you catch that? A huge, full-size SUV from Chevrolet that gets
the same city mileage as a 4-cylinder Toyota Camry!! Chevy obtained
this remarkable achievement through the use of its 2-mode hybrid
system, a technology that Toyota does not have.
http://www.greencar.com/features/2008greencar/
10. Which car was selected by the North American automotive press
corps as the North American Car of the Year for 2007?
Answer: Not only was the Saturn Aura picked by the automotive press
corps as better than the Honda Fit and the Toyota Camry, When a panel
of 47 journalists named the Saturn Aura the North American Car of the
Year over the Toyota Camry, the vote wasn't even close, 205-89.
Chicago Tribune, 1/15/07
http://www.northamericancaroftheyear.org/news.html
11. Which car won the same award for 2008?
Answer: GM again crushed the Japanese competition in 2008 when the
Malibu received 190 votes to the Honda Accords 95. The Accord
actually came in 3rd since GMs other finalist, the Cadillac CTS,
received 165 votes.
http://www.northamericancaroftheyear.org/news.html
12. Which company had a luxury vehicle, a midsize sedan, and a large
truck removed from the Consumer Reports recommended vehicles list in
October 2007 because of mounting quality problems?
Answer: Toyotas much publicized quality problems resulted in
Consumer Reports actually removing from their recommended vehicles
list the Lexus GS luxury car, Camry V6 sedan, and Tundra pickup. This
demotion occurred in October 2007.
If you are one of the many Americans who gave up on Detroits cars
because of a bad experience many years ago, its time to rethink your
position. Rethink Detroit.
Detroit automakers: 79 U.S. jobs per 2,500 cars sold in America.
Foreign automakers: 33 U.S. jobs per 2,500 cars sold in America.
http://levelfieldinstitute.org/
"NUFF SAID" IDIOTS...
9-04-2008 @ 6:35AM
al coholic said...
Your comment needs to be posted in plain view of every senior executive and board member of the (soon not to be) big three.
9-04-2008 @ 9:12AM
jay said...
nathan , i have worked for ford for 23 years , WELL SAID !!!!
9-29-2008 @ 1:28PM
Walt said...
Well, WHTM's comment was incredibly eye opening. Well, all but the CTS--I've been intrigued by NorthStar Caddies for quite some time. Pretty much the only American cars that interested me, even if I was way too young and way too poor to buy one. Still, I have to say that my family had an unbroken string of "bad experiences" "many years ago" from '70 thru '90 or so. Born and raised in Detroit, it saddened me (and infuriated my father) when I bought a Toyota, but it made MUCH more sense. I remember sending him a photo of the odometer turning over 100K miles, something no other car in our family had ever done. Even now, I find American cars to be far too large for my needs and preferences, and I don't much care for the overall "feel". Still, I think I owe to myself to look a lot closer at American when next I buy. Thanks for the alert, WHTM.
10-02-2008 @ 9:07AM
rich said...
The current manufactured 'crisis'-(take a look at what JP Morgan did in 1909 and 1929, and you'll see the same games at play)--I'll take a look at American cars...again.
Just cuz.
But they'll have to beat Toyota...not just by a little, but by a lot. Either in initial cash cost, or significantly reduced depreciation and of course reliability.
First thing I'll do is open the hood. If I see a messa wires and not a centimeter of open space, I'll close the hood and then open a Toyota which won't have any of that.
So there's the challenge. I intend to purchase in 2010.