This is part of a weekly series about the car business. The auto industry plays an important role in the global economy, and record-high oil prices and a global slowdown have contributed to a crisis in the sector. This column will highlight some of the interesting stories that emerge as that crisis plays out.
September car sales reports are due this week, and no one in the auto industry is looking forward to the monthly numbers, especially no one in Detroit.
Expectations are that car sales will be lower once again. According to analysts quoted at Bloomberg, sales at General Motors (NYSE: GM) and Ford (NYSE: F) will be down over 20%, while sales at Chrysler will be down over 30% from last year. Japanese producers also are expected to see lower sales, with the Japanese Big Three Toyota (NYSE:TM), Honda (NYSE: HMC) and Nissan (NASDAQ: NSANY) all down in the 20% range.
The industry is sliding down toward the magic number of one million cars sold in the U.S. for the month. The last time fewer than a million cars were sold in a month was February 1993.
The decline in sales for even the Japanese firms points toward larger problems for the industry, beyond excessive reliance on inefficient trucks and SUVs for profits. In recent months, Toyota and Honda saw only modest sales declines and in some cases sales increases. But the substantial decline for all manufacturers indicates that the consumers are becoming less interested in buying even fuel-efficient vehicles.
Two culprits are likely to blame in the darkening picture of the auto industry: rising credit costs and general economic pessimism. Neither bodes well for the car industry in the next few months, especially not for the American Big Three, which were counting on an economic rebound in early 2009 to spark higher sales. That spark is looking ever dimmer and more distant every day.
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Reader Comments (Page 1 of 1)
9-30-2008 @ 4:00PM
TomWilkinsonatGM said...
One correction -- If you look at our liquidity announcement of July 15, is pretty clear GM is not counting on an economic rebound in the U.S. in 2009. Our planning assumptions are pretty conservative. We will continue to compete hard for every sale, and we think the new product we have introduced, such as the Malibu, Vibe, CTS and Traverse, will help here. But we aren't counting on the market improving signficantly short term.
10-01-2008 @ 4:31AM
Mike Sanders said...
As a person who was working at a GM assembly plant, back in '93, for EDS, I see many similarities in our current situation. Perhaps, it feels more like '88, with all of the job retraining going on... Anyway, I applaud GM on their new designs, such as the Malibu. I am confident in the quality of GM vehicles. My only criticism, is that some GM dealers are very poor (sales and service)... If I were in charge of dealerships, I would require every dealership employe, to visit a Honda dealership. Just go in, spend 1 hour, take mental notes and pretend to be a prospective customer. It's no different than what we did at the assembly center, when we would bring in a Lexus and give it a critique. Knowing your competition is very important.