Most car companies don't give a strong indication of their monthly sales before the figures' release date. Honda (NYSE: HMC) decided to bend that rule and talk about last month's sales, and the news was not pleasant.
According to Reuters, "Honda Motor Co's U.S. sales in January fell by a similar margin to the 35 percent drop posted in December."
It is important to remember that because the Japanese car company has so many fuel-efficient vehicles, it should do better than the Big Three. It also has a solid balance sheet, so buyers do not have to worry about whether a Chapter 11 filing will void warranties.
If these were Honda's numbers, then it probably means that Detroit may show a 40% decline in January sales, compared to January of previous year. This puts the domestic car market on a path to produce too few sales to support U.S. auto firms, even if they make huge expense cuts and get deals from creditors to reduce debt.
What does a really awful January mean? That the Big Three will be back begging Congress for more money before spring.
Douglas A. McIntyre is an editor at 24/7 Wall St.
Top growth fund manager sours on Apple, U.S. tech
New Facebook share structure hints at IPO
Before the bell: Futures higher ahead of housing, jobless data
Reader Comments (Page 1 of 1)
2-03-2009 @ 8:06AM
Jobu37 said...
Most bloggers try to present themselves as knowledgable about the topic they are blogging about. Douglas McIntyre bends that rule everytime he presents his view on the auto industry. In an environment of multi-year lows in fuel prices it would make sense that an automotive manufacturer that has the "reputation" of being a producer of fuel efficient vehicles would suffer more than say a domestic producer that has a full line of trucks and SUVs. The fact that Honda has faired worse than Ford in 2 out of the last three months should be totally ignored when trying provide a biased blog against anything domestic.
It is not impossible that Ford and GM will release worse numbers than Honda. However, it won't be for the reasons that Mr. McIntyre believes. The fact of the matter is that Honda has a customer base that in theory is better able to weather the economic storm of no credit that has hit the entire industry. The fact that they have been lagging the domestics in recent months is due to the fact that their customer base is more financially conservative which makes them less likely to pull the trigger on a new car during the throws of a recessionary environment. If these buyers continue to wait it out it may be bad news for Honda since by the time they get back in the market for a new car to replace their Accord they may stumble across the new Ford Fusion that beats the Accord in every metric one can measure the two cars on.
Keep up the good work Doug.