bottom calls: "We are closer to the end of this problem than we are to the beginning,'' Paulson said in a Bloomberg Television interview "
Paulson's predictive capacity hasn'r been too good. Maybe Bloomberg should talk to those that have been right so far. I think a chart of non-prime IO/ARM/OptionARM resets might provide some better guidance than some blind WildAssGuess.
The only car I've looked at over the last year has been a Honda Fit. Good luck getting one. I'm in no rush though, what I really want is one of those things with a little diesel. That ought to be good for >50mpg instead of the ~40mpg of the current gasoline engined version.
No worries -- "Little Jack" is on the case. From wikipedia: Nardelli was often known as "Little Jack", after his mentor Jack Welch, whom Nardelli had ambitions to succeed as CEO of GE.
Sounds like something out of Dilbert, doesn't it? LOL.
Actually there are positives to take out of the news story. GM had a strike so car sales expected to be down but look at Toyota with increased sales. That must mean economy is positive.
Obviously, this and my earlier post is explaining how this is understood on Bizarro World (otherwise known as the stock market).
"GM, hobbled by a strike at a major axle supplier.."
Sheesh, I wish they were half as good at making cars as they are at making excuses.
Good riddance to the big 3, the sooner they're gone, the sooner this country will be rid of an ugly festering carbuncle on its economic and environmental landscape.
Actually there are positives to take out of the news story. GM had a strike so car sales expected to be down but look at Toyota with increased sales. That must mean economy is positive.
Also, the reduced number of sales will mean fewer cars on the road which will help drive down the cost of gasoline due to decreasing demand.
How anyone could interpret this news as anything other than bullish is beyond me!
If the US car companies spent more time designing efficient cars, and less time lobbying congress to not improve fuel efficiency --- perhaps they wouldn't be in this mess right now.
4shzl writes:
No worries -- "Little Jack" is on the case. From wikipedia:
Nardelli was often known as "Little Jack", after his mentor Jack Welch, whom Nardelli had ambitions to succeed as CEO of GE.
The only thing easier to buy during the bubble years than a house was a car. The big 3 still have some cash to burn through before one of them goes bk, though I'd imagine Chrysler is being asset stripped for all it's worth.
reduced sales, less cars, reduction in pollution which means less staff sick, so much better for overall productivity and hence GDP
reduced cars sales so less demand for gasoline, gasoline price down means more money for people to spend elsewhere, such as on cars
reduced price of gasoline, means less competition from ethanol which will lower agricultural prices, giving people more money to spend elsewhere, such as on cars.
4shzl writes:
No worries -- "Little Jack" is on the case. From wikipedia:
Nardelli was often known as "Little Jack", after his mentor Jack Welch, whom Nardelli had ambitions to succeed as CEO of GE.
If I was looking for news about a polygamus guy with daughters in his basement who was photographed by Annie Leibowitz, I wouldn't have had any problem finding the story...
Anyone get the feeling that the number of trivial headlines are proportional to the severity of the economic crisis?
less car sales, means reduced demand for car workers which will mean laying off car workers which will reduce the costs of car companies.
less car sales, means reduced demand for car workers, increasing the unemployed, which will reduce overall wages for entire economy which is good for corporate margins.
Where is ShortCourage today? Cuz my shorts could definitely use some courage after a day like today. While I don't wish unemployment on anyone I sure hope NFP comes through tomorrow.
"Inside Edition" said it had foreclosure documents showing Canseco owed a bank more than $2.5 million on the house.
"I've been out of the game for about eight or nine years and obviously this issue with the foreclosure on my home," he told "Inside Edition".
"I do have a judgment on my home and it to me is very strange because it didn't make financial sense for me to keep paying a mortgage on a home that was basically owned by someone else," he said."
Is there a longshoreman strike in the US today? Two days ago, I heard there might be, but I can't find the news of it anywhere...
So there's a one-day strike today protesting the Iraq War which will potentially close down every west-coast port in the United States and that news can't be found on any of the major news sites on the web?
--
Housing and autos, two biggest expenditures for households, are down big and even gasoline consumption has been forced down. How about restaurants and generally hospitality and leisure?
Smarmy guy, but there's something you could never hate about Canseco. His swing was a blur even in slow motion. And he was very er... human of the field. Still like him a lot better than his teammate, McGwire, a characterless, stoic steroid animal. How he even got consideration for HoF is beyond me.
Well, if you read the release, you would see that the switch from beef to rat meat was the sole factor in the increasing profitability. Without this switch, profits would have fallen 23%.
With Toyota producing many of its cars here in the states, it would be interesting to know if they use the same supplier of axles and somehow had a winning recipe as to how to make it all still work out.
The fast food restaurants are taking business from "casual dining" sitdown restaurants (Applebees, etc.. Hey, you don't even have to tip the sweaty 16-year-old behind the counter.
The Toyota dealer near me has had a brimming-full lot since last summer. We're in eco-crazy territory here, and he can't even turn over his Priuses. He's got a ton.
Toyota and Scion vehicle inventories have risen to record levels because the company misjudged just how much the U.S. market would decline this year.
The number of units in dealership stock and en route have swelled to about 376,000. That's about 100,000 units more than were on the ground last summer, and up from about 348,000 a year ago.
The main problem: Toyota produced lots of pickups and SUVs, a gamble that has not paid off.
"We have an overabundance of trucks," said a dealer in the region of giant distributor Southeast Toyota.
Higher inventories certainly aren't bad news for all Toyota dealers. Some that struggle to get enough product see an opportunity to expand their businesses.
Still, Toyota's vaunted inventory controls have come up against market forces even it cannot tame. Toyota had based its production plans on a rosy industrywide U.S. sales forecast of 16.1 million units this year.
As of March 1, the days supply for Toyota and Scion was 58 days, a level not seen since early 2003, just before the U.S. invasion of Iraq. Although that shrank to 51 days by April 1, the raw number of units on the ground barely budged. Since 2000, the average supply on April 1 has been 44 days.
The recession and spiking gasoline prices are hammering all automakers, and Toyota's days supply is still lower than those of Dodge, Chevrolet and Ford. And no Toyota dealer is complaining about having too many Prius, Corolla, Camry or Yaris units.
Of course, higher inventories also are partly a function of higher sales levels and Toyota sales have risen steadily for years. But Toyota/Scion volume was down 5.1 percent to 505,232 units during the first three months of 2008.
"February was the highest dealer stock in the history of our region in terms of gross units," said the Southeast Toyota dealer. "I don't think we have hit an objective since July or August."
A Southeast Toyota spokeswoman declined to comment.
In some regions, Toyota's "turndown" inventory vehicles that no dealer wants to claim has risen sharply. Those regional pools consist mostly of the Tundra full-sized pickup, Sienna minivan and Sequoia and 4Runner SUVs.
"In the past, there have been only a few vehicles in the turndown pool," the Southeast Toyota dealer said. "Last month, Southeast Toyota had 9,700 vehicles that had been turned down twice by dealers and either sitting at the port or at sea. That's a significant number."
Toyota executives and spokespeople declined to comment for this article. In the past, executives have said Toyota will whittle high inventories with a combination of production cuts and increased incentives.
The Southeast dealer is unimpressed with Toyota's efforts to date
In the first quarter GDP numbers, motor vehicle output declined by 10.8% while personal consumption expenditures on motor vehicles and parts declined by 13.3%.
Personal consumption expenditures for motor vehicles and parts (seasonally adjuted) were pretty flat for all four quarters of 2007. Then, they fell off the table in the first quarter of 2008.
This number would reflect not only the number of cars being sold in the U.S. but also their prices.
Toyota uses a variation of the turn-and-earn inventory system. If a dealer sells more vehicles, he earns a larger allocation, fueling more growth. Building a larger store also earns more cars. But a dealer also can turn down the extra cars if he doesn't think he can sell them.
Those unwanted vehicles go into a regional pool from which all area dealers can choose. After several days, the vehicles not taken are placed in another inventory pool. Any vehicles unclaimed after that are placed in the turndown pool. Usually, those vehicles have hard-to-sell options packages, or are slow-sellers, such as the Camry Solara coupe during its last days.
Toyota then places incentives on the leftovers to unload them to dealers. But the slow economy and high gasoline prices mean even recently redesigned vehicles like the Tundra and Sequoia aren't meeting sales expectations and end up in the turndown pool.
Said a Northern California dealer, who also declined to be named: "What do you think happens to a region when a dealer builds a new store and earns all these extra cars, but then he doesn't take them? Those cars get allocated to the rest of us, and we get beat on to take them."
But another Southeast Toyota dealer said Toyota has never required a dealer to take an unwanted vehicle.
"They may sell hard at times," the dealer said, "but I am not aware of them ever forcing anyone to take cars."
I found it interesting that the recent offer to buy Wrigley values the company more than Big 3 Auto put together. Amazing that chewing gum maker is valued more than once vaunted US manufacturing giants and American Icons.
Sue, "Will they be trying to push extra procedures my car doesn't need?"
Uh, yes. The truth is, dealers always try to sell services you may or may not need. The only real source of earnings t a car dealer is service. Sales is a loss leader, but a future source of revenue as buyers return for service. They LOVE warranty work, since there's no direct cost to the consumer - Price doesn't matter. It's like health coverage with low co-pay. Consumer and payer are different parties.
"Higher inventories certainly aren't bad news for all Toyota dealers. Some that struggle to get enough product see an opportunity to expand their businesses."
That's a great idea - they can take out a big loan and develop the empty lot next door for the new inventory.
Maybe Ben and Hank actually pulled it off, and dragged this thing out long enough for those on the California/Florida/Nevada real estate hook to survive. Maybe most of us will muddle through, after all.
"Maybe Ben and Hank actually pulled it off, and dragged this thing out long enough for those on the California/Florida/Nevada real estate hook to survive. Maybe most of us will muddle through, after all.
Would be nice."
BreakOut
Yes, I am sure they pulled it off. As sure I am about anything. Just like I am sure that given the proper cuddling and training, Grizzley bears won't hurt you.
I think the real story here is the collapse of the truck/SUV market. Prices of used trucks and SUV's has declined so fast that some dealers are refusing to take them on trade; others offer such a low bid that customer can't afford to trade. This will have an impact on all the financing companies that have these vehicles leased as they may be $2-3k under the estimated residual value. There was a Dodge dealer in DFW advertising a Brand New 2008 Dodge Ram 1/2 ton pickup regular cab for $9,500.00. This will all prevent many people from dumping their trucks/SUV's for more fuel efficient vehicles as their loan balances will far exceed any trade-in value (even more than usual).
This is the feds worst nightmare come true, a consumer pullback. They have no power to control this or the effect it will have on the economy. The pendulum is now swinging away from consumerism and it is gaining momentum.
Don't you believe that the strike affected GM in any way except positively. An axle plant strike doesn't affect you when you've got a 5 MONTH supply of the pickups and SUVs affected. Which is why GM wasn't putting pressure on its supplier or the union to settle.
Southeast Toyota Dealer is under a different arrangement than Toyota. JM enterprises is a reseller of Toyota 1 of 2 left and has different flooring arrangements then a Nor Cal dealer. Gulf states toyota is the other.
Sue,
A dealer or a independent will try to upsell you into maintenance package, fluid cleaner etc. Just have them change your oil, filter etc. They will back off.
Vehicle electronics today are complex and it's wise to stick with factory techs. When you do have more than maintenance I wouldn't go to an independent. They don't have access to Tech Service bulletins and remember you can void Manfuacturer warranties by going to independent. Plus if they do something wrong, they will most likely fix it so you dont send in a bad survey. Independent good luck.
I work with some of the largest dealer groups in the nation on the fixed operation side.
When dealers are not selling vehicles thier's alot of income for finance and sales personnel out the door.
So it's bad for the front end too.
My dealer clients tell me it's tough.
Sure is nice to have something they need though!
OT:
Oi! Kangaroo meat is delectable! Being a California lad transplanted to Australia I can't get enough of the stuff! It's 100% organic by definition (as no roos are farmed) and is one of the leanest red meats available. The way I describe the taste is "the best steak I've ever had"! 'Corse i like my meat Med-Rare (which is a requirement due to it's very low fat content) so your mileage may vary =)
Oh... and stupid California has a ban on kangaroo products (they seem to think their endangered I guess). If Jack-in-the-Box served roo-bergers I'd love them more then In-n-Out!
Ok, diatribe done... but really if you ever have the chance to try kangaroo meat, the stuff's GREAT!
What I wonder about is the "bet" that even Toyota made (not to mention the continuing dependence of GM and Ford) on gas guzzling trucks and SUVs. It was apparent to me even 5 years ago (is that the length of time a vehicle takes from planning to the pipeline?) that gas efficiency would be a big future sell. And believe me, I have absolutely no insight into the economy. Couldn't Toyota see how well their hybrid was selling to realize that it wouldn't be long before gas-guzzlers would be dead on the lot? It just really seems stupid to me.
I'm a little confused. Can someone please explain how car sales relate to a strike? I don't think there where empty lots because of the strike. This is just more union bashing.
Needless to say, it would seem that unions have proven the need by being the only manufacturing jobs that have not been moved overseaes, yet.
Couldn't Toyota see how well their hybrid was selling to realize that it wouldn't be long before gas-guzzlers would be dead on the lot? It just really seems stupid to me.
Defending SUVs
Reinert defends Toyota's need for sport utility vehicles, minivans and pickups, which contributed 42 percent of its 2.6 million U.S. vehicle sales in 2007.
The company earns about $6,000 before taxes in the U.S. on an SUV. That compares with a $1,000 profit on a Corolla and a small loss on a Prius, says David Healy, an analyst at New York- based Burnham Securities Inc. [Bloomberg]
OK, boys and girls, let's put on our thinking caps and answer the question - if Toyota can only sell you one vehicle, which would they prefer that it be?
And for the real thinkers, if GM and Ford have about a $2K wage cost disadvantage on every vehicle they make, is there even a question? Last I heard, making autos was supposed to be business, not a charity. Why do we keep hearing the tired refrain about the Big 3 not making small cars? Regarding selling that Prius, what's the joke about making it up in volume, jac?
It won't matter what the car companies want to sell us when nobody can afford to gas up their monster truck at $4+ a gallon for gas.
But all will be well. As explained earlier lower car sales is a good thing since it means consumers can spend more money buying cars, and companies can lay off workers, which improves the company bottom line, which is thus good for the economy. Ideally, the company can lay off everyone, which will make them even more profitable! Just so long as we can keep selling stuff to Americans without paying them, everything will be fine.
I wonder how much longer this farce (the market, the Fed cuts, the bail-out plans, etc.) can continue. Probably until the next administration, and then we'll get a changing of the clowns for a new circus to begin.
So its just a law of nature that gas guzzling trucks and SUVs are going to make money and more fuel efficient vehicles are doomed to a loss? Wouldn't a smart company like Toyota have realized that the answer is not to join the dinosaurs, but figure out how to make money on fuel-efficiency? I have my thinking cap on, but it still doesn't convince me that their strategy makes sense in the long term.
No, jac, that wasn't my point, and I don't for a minute think the decision makers at Toyota disagree with you either. But, as posed, your question contains a strong element of hindsight judgment, and doesn't give proper weight to the fact that this is still a business decision, made in context. And for auto manufacture, the lead time of design and production scheduling means the Toyotas piling up today were the result of decisions made possibly years before. I only wanted to give some perspective of the market incentives, that we the auto-consuming public had effected, that went into those decisions. I always knew there was strong motivation for SUV production, especially for Toyota/Nissan/Honda, who came to the profit margin party late. Too late, it would seem. I think all knew, even GM and Ford, that the party would end, sooner or later, slowly or quickly.
But even I was surprised when I saw the multiple on the margins. Profit on one Sequoia sale equals that of six Corollas? It would be pretty hard for anyone to make the call for Toyota to go cold turkey on SUVs, even if it was the right one in the long run, if it meant giving up billions in profit. As the quote indicates, even a true believer like Reinhart couldn't do it. Yes, the tide has turned, and rather suddenly. Not just with gas prices, but in the face of a looming recession. The economics of SUV vs. hybrid will shift dramatically, and Toyota is nimble enough to adapt. They may suffer losses short term, but emerge. GM and Ford are probably finished, but as my other point, they had no choice.
barley writes, "They LOVE warranty work, since there's no direct cost to the consumer - Price doesn't matter. It's like health coverage with low co-pay. Consumer and payer are different parties."
Not quite,I've worked as a GM dealer mechanic. Shop and mechanic get screwed doing warranty work due to unreasonable reimbusments from manufacturers. Mechanics are actually subsidizing poor designs and craftsamnship of manufacturers, for the chance to rape cash customers.
Wow....23% hurts.
Wow, Chrysler is really bombing out. Nothing has changed in terms of my vote for one of the major bankruptcy stories of late 2008/early 2009.
Jim Press must be wondering why the heck he left Toyota.
I don't think actual car sales matter much for car manufacturers.
bottom calls: "We are closer to the end of this problem than we are to the beginning,'' Paulson said in a Bloomberg Television interview "
Paulson's predictive capacity hasn'r been too good. Maybe Bloomberg should talk to those that have been right so far. I think a chart of non-prime IO/ARM/OptionARM resets might provide some better guidance than some blind WildAssGuess.
Why wouldn't it?
Dealers ain't ordering any more cars if they can't sell what they got.
Kp writes:
Wow....23% hurts.
But the market expected 25%, so this is good news!
/sarcasm
The only car I've looked at over the last year has been a Honda Fit. Good luck getting one. I'm in no rush though, what I really want is one of those things with a little diesel. That ought to be good for >50mpg instead of the ~40mpg of the current gasoline engined version.
No worries -- "Little Jack" is on the case. From wikipedia:
Nardelli was often known as "Little Jack", after his mentor Jack Welch, whom Nardelli had ambitions to succeed as CEO of GE.
Sounds like something out of Dilbert, doesn't it? LOL.
Actually there are positives to take out of the news story. GM had a strike so car sales expected to be down but look at Toyota with increased sales. That must mean economy is positive.
Obviously, this and my earlier post is explaining how this is understood on Bizarro World (otherwise known as the stock market).
OT -
Is there a longshoreman strike in the US today? Two days ago, I heard there might be, but I can't find the news of it anywhere...
"GM, hobbled by a strike at a major axle supplier.."
Sheesh, I wish they were half as good at making cars as they are at making excuses.
Good riddance to the big 3, the sooner they're gone, the sooner this country will be rid of an ugly festering carbuncle on its economic and environmental landscape.
Actually there are positives to take out of the news story. GM had a strike so car sales expected to be down but look at Toyota with increased sales. That must mean economy is positive.
Also, the reduced number of sales will mean fewer cars on the road which will help drive down the cost of gasoline due to decreasing demand.
How anyone could interpret this news as anything other than bullish is beyond me!
If the US car companies spent more time designing efficient cars, and less time lobbying congress to not improve fuel efficiency --- perhaps they wouldn't be in this mess right now.
4shzl writes:
No worries -- "Little Jack" is on the case. From wikipedia:
Nardelli was often known as "Little Jack", after his mentor Jack Welch, whom Nardelli had ambitions to succeed as CEO of GE.
I thought it was little Jack off
The only thing easier to buy during the bubble years than a house was a car. The big 3 still have some cash to burn through before one of them goes bk, though I'd imagine Chrysler is being asset stripped for all it's worth.
OT
Baseball Star Canseco Loses Home to Foreclosure
Say it ain't so...
Milkman @ 5:00
Yes.
Check it out.
t r u t h o u t
Other positives:
4shzl writes:
No worries -- "Little Jack" is on the case. From wikipedia:
Nardelli was often known as "Little Jack", after his mentor Jack Welch, whom Nardelli had ambitions to succeed as CEO of GE.
Didn't I see this on 30 Rock?
Baseball Star Canseco Loses Home to Foreclosure
kett82 | 05.01.08 - 5:08 pm | #
It's the bottom of the 9th inning for him.
Thanks, Ethan.
If I was looking for news about a polygamus guy with daughters in his basement who was photographed by Annie Leibowitz, I wouldn't have had any problem finding the story...
Anyone get the feeling that the number of trivial headlines are proportional to the severity of the economic crisis?
more positives:
Where is ShortCourage today? Cuz my shorts could definitely use some courage after a day like today. While I don't wish unemployment on anyone I sure hope NFP comes through tomorrow.
Jose Canseco is a walkway!?!
"Inside Edition" said it had foreclosure documents showing Canseco owed a bank more than $2.5 million on the house.
"I've been out of the game for about eight or nine years and obviously this issue with the foreclosure on my home," he told "Inside Edition".
"I do have a judgment on my home and it to me is very strange because it didn't make financial sense for me to keep paying a mortgage on a home that was basically owned by someone else," he said."
Baseball star Canseco loses home to foreclosure
| Sports
| Reuters
Milkman writes:
OT -
Is there a longshoreman strike in the US today? Two days ago, I heard there might be, but I can't find the news of it anywhere...
So there's a one-day strike today protesting the Iraq War which will potentially close down every west-coast port in the United States and that news can't be found on any of the major news sites on the web?
You've got to be kidding me.
--
Housing and autos, two biggest expenditures for households, are down big and even gasoline consumption has been forced down. How about restaurants and generally hospitality and leisure?
Jas
TCA, front page Reuters
West Coast ports closed by worker protest
| Reuters
Canseco walking away. First walk of his career and another strike out for this half-wit!
TCA said: "... that news can't be found on any of the major news sites on the web?"
I saw it on Yahoo! this morning. Nowhere else though.
Since he's a baseball player, Cansenco technically "walked off".
TCA:
LATimes had it on the front page.
Ports idled by workers' war protest - Los Angeles Times
The port is one of the last good blue collar jobs in coastal LA so it matters to LA people.
Vito said: "Since he's a baseball player, Cansenco technically "walked off"."
Forced error?
Hit by a 'pitch'?
Okay. I'll stop.
Shocking, I say. I wouldn't be anymore shocked if the next headline I read say "Retardation Confirmed -- President Can't Hide It Anymore."
Terry writes:
Vito said: "Since he's a baseball player, Cansenco technically "walked off"."
Forced error?
Hit by a 'pitch'?
Okay. I'll stop.
Canseco stole home.
Too easy.
Canseco didn't intend to get foreclosed . . . it was an error.
In addition to human growth hormone, he seems to have abused HELOC growth hormones as well. Haven't we all really?
Damn! Beaten to the obvious joke. Again.
Elvis - It was confirmed when TV cameras caught the cork on Bush's fork at a State dinner.
What restaurants?
Burger King profit jumps 21%!
Smarmy guy, but there's something you could never hate about Canseco. His swing was a blur even in slow motion. And he was very er... human of the field. Still like him a lot better than his teammate, McGwire, a characterless, stoic steroid animal. How he even got consideration for HoF is beyond me.
"What restaurants?
Burger King profit jumps 21%!"
REBear
Well, if you read the release, you would see that the switch from beef to rat meat was the sole factor in the increasing profitability. Without this switch, profits would have fallen 23%.
"Canseco stole home.
Too easy.
TCA"
No, no. He was thrown out at home.
With Toyota producing many of its cars here in the states, it would be interesting to know if they use the same supplier of axles and somehow had a winning recipe as to how to make it all still work out.
"Burger King profit jumps 21%!"
The fast food restaurants are taking business from "casual dining" sitdown restaurants (Applebees, etc.. Hey, you don't even have to tip the sweaty 16-year-old behind the counter.
Last week I read that Toyota had it largest supply of inventory on the ground in the US ever. Dealers were turning down product.
My bad, here it is...headline complete:
Canseco thrown out trying to steal home
The Toyota dealer near me has had a brimming-full lot since last summer. We're in eco-crazy territory here, and he can't even turn over his Priuses. He's got a ton.
Burger King always uses rat meat. It's just that more people could afford only rat meat.
Toyota inventory story:
Toyota and Scion vehicle inventories have risen to record levels because the company misjudged just how much the U.S. market would decline this year.
The number of units in dealership stock and en route have swelled to about 376,000. That's about 100,000 units more than were on the ground last summer, and up from about 348,000 a year ago.
The main problem: Toyota produced lots of pickups and SUVs, a gamble that has not paid off.
"We have an overabundance of trucks," said a dealer in the region of giant distributor Southeast Toyota.
Higher inventories certainly aren't bad news for all Toyota dealers. Some that struggle to get enough product see an opportunity to expand their businesses.
Still, Toyota's vaunted inventory controls have come up against market forces even it cannot tame. Toyota had based its production plans on a rosy industrywide U.S. sales forecast of 16.1 million units this year.
As of March 1, the days supply for Toyota and Scion was 58 days, a level not seen since early 2003, just before the U.S. invasion of Iraq. Although that shrank to 51 days by April 1, the raw number of units on the ground barely budged. Since 2000, the average supply on April 1 has been 44 days.
The recession and spiking gasoline prices are hammering all automakers, and Toyota's days supply is still lower than those of Dodge, Chevrolet and Ford. And no Toyota dealer is complaining about having too many Prius, Corolla, Camry or Yaris units.
Of course, higher inventories also are partly a function of higher sales levels and Toyota sales have risen steadily for years. But Toyota/Scion volume was down 5.1 percent to 505,232 units during the first three months of 2008.
"February was the highest dealer stock in the history of our region in terms of gross units," said the Southeast Toyota dealer. "I don't think we have hit an objective since July or August."
A Southeast Toyota spokeswoman declined to comment.
In some regions, Toyota's "turndown" inventory vehicles that no dealer wants to claim has risen sharply. Those regional pools consist mostly of the Tundra full-sized pickup, Sienna minivan and Sequoia and 4Runner SUVs.
"In the past, there have been only a few vehicles in the turndown pool," the Southeast Toyota dealer said. "Last month, Southeast Toyota had 9,700 vehicles that had been turned down twice by dealers and either sitting at the port or at sea. That's a significant number."
Toyota executives and spokespeople declined to comment for this article. In the past, executives have said Toyota will whittle high inventories with a combination of production cuts and increased incentives.
The Southeast dealer is unimpressed with Toyota's efforts to date
http://www.autonews.com/apps/pbcs.dll/article?AID=/20080428/ANA06/804280346/1197
In the first quarter GDP numbers, motor vehicle output declined by 10.8% while personal consumption expenditures on motor vehicles and parts declined by 13.3%.
Personal consumption expenditures for motor vehicles and parts (seasonally adjuted) were pretty flat for all four quarters of 2007. Then, they fell off the table in the first quarter of 2008.
This number would reflect not only the number of cars being sold in the U.S. but also their prices.
"Burger King always uses rat meat. It's just that more people could afford only rat meat."
REBear
And those were the people who used to eat kangaroo meat at Jack-in-the-Box.
Toyota uses a variation of the turn-and-earn inventory system. If a dealer sells more vehicles, he earns a larger allocation, fueling more growth. Building a larger store also earns more cars. But a dealer also can turn down the extra cars if he doesn't think he can sell them.
Those unwanted vehicles go into a regional pool from which all area dealers can choose. After several days, the vehicles not taken are placed in another inventory pool. Any vehicles unclaimed after that are placed in the turndown pool. Usually, those vehicles have hard-to-sell options packages, or are slow-sellers, such as the Camry Solara coupe during its last days.
Toyota then places incentives on the leftovers to unload them to dealers. But the slow economy and high gasoline prices mean even recently redesigned vehicles like the Tundra and Sequoia aren't meeting sales expectations and end up in the turndown pool.
Said a Northern California dealer, who also declined to be named: "What do you think happens to a region when a dealer builds a new store and earns all these extra cars, but then he doesn't take them? Those cars get allocated to the rest of us, and we get beat on to take them."
But another Southeast Toyota dealer said Toyota has never required a dealer to take an unwanted vehicle.
"They may sell hard at times," the dealer said, "but I am not aware of them ever forcing anyone to take cars."
Anonymous writes:
My bad, here it is...headline complete:
Canseco thrown out trying to steal home
Someone has quite the ARM!
Yet Burger King still has a hissy fit when asked to pay immigrant tomato pickers and extra penny a bushel.
ugh.
I found it interesting that the recent offer to buy Wrigley values the company more than Big 3 Auto put together. Amazing that chewing gum maker is valued more than once vaunted US manufacturing giants and American Icons.
Interfluidity :: Insolvency is philosophy, illiquidity is fact
Well, if those are legal immigrants, they should get at least minimum wage, right?
In times like these, is it a good idea to avoid the dealer for servicing? Will they be trying to push extra procedures my car doesn't need?
Sue,
Yes.
Canseco thrown out trying to steal home
da HAHAHAHAHHAHAHAHHA.....
Gary writes:
Damn! Beaten to the obvious joke. Again.
Just like Jose's ex wife.
(Sorry)
Sue, "Will they be trying to push extra procedures my car doesn't need?"
Uh, yes. The truth is, dealers always try to sell services you may or may not need. The only real source of earnings t a car dealer is service. Sales is a loss leader, but a future source of revenue as buyers return for service. They LOVE warranty work, since there's no direct cost to the consumer - Price doesn't matter. It's like health coverage with low co-pay. Consumer and payer are different parties.
barely- but it is more like an HMO, they are paid about 30% of what someone would pay if paid out of pocked.
"Higher inventories certainly aren't bad news for all Toyota dealers. Some that struggle to get enough product see an opportunity to expand their businesses."
That's a great idea - they can take out a big loan and develop the empty lot next door for the new inventory.
Ol' Gill can't lose this time!
That ought to be good for >50mpg instead of the ~40mpg of the current gasoline engined version.
that'd be a wash what with the present price premium dealers are charging for diesel (diesel has more BTU per gallon than regular)
Seb, do you think if the automakers were based in North Carolina everything would be great?
Maybe Ben and Hank actually pulled it off, and dragged this thing out long enough for those on the California/Florida/Nevada real estate hook to survive. Maybe most of us will muddle through, after all.
Would be nice.
"Maybe Ben and Hank actually pulled it off, and dragged this thing out long enough for those on the California/Florida/Nevada real estate hook to survive. Maybe most of us will muddle through, after all.
Would be nice."
BreakOut
Yes, I am sure they pulled it off. As sure I am about anything. Just like I am sure that given the proper cuddling and training, Grizzley bears won't hurt you.
I think the real story here is the collapse of the truck/SUV market. Prices of used trucks and SUV's has declined so fast that some dealers are refusing to take them on trade; others offer such a low bid that customer can't afford to trade. This will have an impact on all the financing companies that have these vehicles leased as they may be $2-3k under the estimated residual value. There was a Dodge dealer in DFW advertising a Brand New 2008 Dodge Ram 1/2 ton pickup regular cab for $9,500.00. This will all prevent many people from dumping their trucks/SUV's for more fuel efficient vehicles as their loan balances will far exceed any trade-in value (even more than usual).
Jas, times are tough for restaurants:
News Release | National Restaurant Association
This is the feds worst nightmare come true, a consumer pullback. They have no power to control this or the effect it will have on the economy. The pendulum is now swinging away from consumerism and it is gaining momentum.
Don't you believe that the strike affected GM in any way except positively. An axle plant strike doesn't affect you when you've got a 5 MONTH supply of the pickups and SUVs affected. Which is why GM wasn't putting pressure on its supplier or the union to settle.
The reports from Ford and GM were amazing. They both sold 25,000 less trucks and SUV's. F series dropped from 60,000 to 40,000 alone.
Keep in mind the truck division is the only profitable division at Ford and GM.
If these numbers get worse in May the goverment will have to bail out the Big 3 with a tax rebate for buying a truck or SUV.
Southeast Toyota Dealer is under a different arrangement than Toyota. JM enterprises is a reseller of Toyota 1 of 2 left and has different flooring arrangements then a Nor Cal dealer. Gulf states toyota is the other.
Sue,
A dealer or a independent will try to upsell you into maintenance package, fluid cleaner etc. Just have them change your oil, filter etc. They will back off.
Vehicle electronics today are complex and it's wise to stick with factory techs. When you do have more than maintenance I wouldn't go to an independent. They don't have access to Tech Service bulletins and remember you can void Manfuacturer warranties by going to independent. Plus if they do something wrong, they will most likely fix it so you dont send in a bad survey. Independent good luck.
I work with some of the largest dealer groups in the nation on the fixed operation side.
When dealers are not selling vehicles thier's alot of income for finance and sales personnel out the door.
So it's bad for the front end too.
My dealer clients tell me it's tough.
Sure is nice to have something they need though!
Elvis,
Sonic and Hendrick auto groups are based in Charlotte
2 top 10 dealer groups.
Elvis @ 5:50pm
OT:
Oi! Kangaroo meat is delectable! Being a California lad transplanted to Australia I can't get enough of the stuff! It's 100% organic by definition (as no roos are farmed) and is one of the leanest red meats available. The way I describe the taste is "the best steak I've ever had"! 'Corse i like my meat Med-Rare (which is a requirement due to it's very low fat content) so your mileage may vary =)
Oh... and stupid California has a ban on kangaroo products (they seem to think their endangered I guess). If Jack-in-the-Box served roo-bergers I'd love them more then In-n-Out!
Ok, diatribe done... but really if you ever have the chance to try kangaroo meat, the stuff's GREAT!
Canseco thrown out trying to steal home
Not as funny but:
Canseco Sits Out, Refuses to Report, Looks For Contract Re-Negotiatio
What I wonder about is the "bet" that even Toyota made (not to mention the continuing dependence of GM and Ford) on gas guzzling trucks and SUVs. It was apparent to me even 5 years ago (is that the length of time a vehicle takes from planning to the pipeline?) that gas efficiency would be a big future sell. And believe me, I have absolutely no insight into the economy. Couldn't Toyota see how well their hybrid was selling to realize that it wouldn't be long before gas-guzzlers would be dead on the lot? It just really seems stupid to me.
I'm a little confused. Can someone please explain how car sales relate to a strike? I don't think there where empty lots because of the strike. This is just more union bashing.
Needless to say, it would seem that unions have proven the need by being the only manufacturing jobs that have not been moved overseaes, yet.
jac says:
Couldn't Toyota see how well their hybrid was selling to realize that it wouldn't be long before gas-guzzlers would be dead on the lot? It just really seems stupid to me.
Defending SUVs
Reinert defends Toyota's need for sport utility vehicles, minivans and pickups, which contributed 42 percent of its 2.6 million U.S. vehicle sales in 2007.
The company earns about $6,000 before taxes in the U.S. on an SUV. That compares with a $1,000 profit on a Corolla and a small loss on a Prius, says David Healy, an analyst at New York- based Burnham Securities Inc. [Bloomberg]
OK, boys and girls, let's put on our thinking caps and answer the question - if Toyota can only sell you one vehicle, which would they prefer that it be?
And for the real thinkers, if GM and Ford have about a $2K wage cost disadvantage on every vehicle they make, is there even a question? Last I heard, making autos was supposed to be business, not a charity. Why do we keep hearing the tired refrain about the Big 3 not making small cars? Regarding selling that Prius, what's the joke about making it up in volume, jac?
It won't matter what the car companies want to sell us when nobody can afford to gas up their monster truck at $4+ a gallon for gas.
But all will be well. As explained earlier lower car sales is a good thing since it means consumers can spend more money buying cars, and companies can lay off workers, which improves the company bottom line, which is thus good for the economy. Ideally, the company can lay off everyone, which will make them even more profitable! Just so long as we can keep selling stuff to Americans without paying them, everything will be fine.
I wonder how much longer this farce (the market, the Fed cuts, the bail-out plans, etc.) can continue. Probably until the next administration, and then we'll get a changing of the clowns for a new circus to begin.
Econoclast:
So its just a law of nature that gas guzzling trucks and SUVs are going to make money and more fuel efficient vehicles are doomed to a loss? Wouldn't a smart company like Toyota have realized that the answer is not to join the dinosaurs, but figure out how to make money on fuel-efficiency? I have my thinking cap on, but it still doesn't convince me that their strategy makes sense in the long term.
No, jac, that wasn't my point, and I don't for a minute think the decision makers at Toyota disagree with you either. But, as posed, your question contains a strong element of hindsight judgment, and doesn't give proper weight to the fact that this is still a business decision, made in context. And for auto manufacture, the lead time of design and production scheduling means the Toyotas piling up today were the result of decisions made possibly years before. I only wanted to give some perspective of the market incentives, that we the auto-consuming public had effected, that went into those decisions. I always knew there was strong motivation for SUV production, especially for Toyota/Nissan/Honda, who came to the profit margin party late. Too late, it would seem. I think all knew, even GM and Ford, that the party would end, sooner or later, slowly or quickly.
But even I was surprised when I saw the multiple on the margins. Profit on one Sequoia sale equals that of six Corollas? It would be pretty hard for anyone to make the call for Toyota to go cold turkey on SUVs, even if it was the right one in the long run, if it meant giving up billions in profit. As the quote indicates, even a true believer like Reinhart couldn't do it. Yes, the tide has turned, and rather suddenly. Not just with gas prices, but in the face of a looming recession. The economics of SUV vs. hybrid will shift dramatically, and Toyota is nimble enough to adapt. They may suffer losses short term, but emerge. GM and Ford are probably finished, but as my other point, they had no choice.
Regards,
barley writes, "They LOVE warranty work, since there's no direct cost to the consumer - Price doesn't matter. It's like health coverage with low co-pay. Consumer and payer are different parties."
Not quite,I've worked as a GM dealer mechanic. Shop and mechanic get screwed doing warranty work due to unreasonable reimbusments from manufacturers. Mechanics are actually subsidizing poor designs and craftsamnship of manufacturers, for the chance to rape cash customers.