Auto Sales Decline in July, 2nd Half Expected to be Worse
Submitted by
CalculatedRisk on Fri, 08/01/2008 - 10:11am (96 comments)
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OT - IndyMac files for bankruptcy..
Law.com - IndyMac Files for Bankruptcy
Granted they have a small sales base, I can't figure why Sequoia and Land Cruiser sales are each up over 50% YoY. The only thing I can see is that the discounts must be huge.
Must... keep... clunker together til'... winter.
eric in vegas writes:
Must... keep... clunker together til'... winter.
LOL... wonder just how good a deal you might get Dec 24...
No new SUV needed to drive to the benefits office...
How about "walk away" car loans?
Too bad MBZ & BMW aren't cutting back on leases; it would totally defrock all the SoCal A-list wannabes.
Too bad MBZ & BMW aren't cutting back on leases; it would totally defrock all the SoCal A-list wannabes.
!$#Q@#@ Haloscan.
Since we are talking bank runs...
We have a joint account at IngDirect.
According to FDIC, "All co-owners must sign the deposit account signature card ".
http://www.fdic.gov/deposit/deposits/insured/ownership3.html#joint
I called Ingdirect and the customer service rep tells me IngDirect does not do signature cards because they are an online bank. Its more than three weeks since i wrote to FDIC, they haven't bothered to reply.
What the f' are they doing?
Here is a reply to RE from the previous thread, just gotta repost it:
RE,
OK here is the challenge for all to see - the nominal GDP amount of growth in 1Q2008 was $119.6 billion, and in 2Q2008 the amount of growth was $105.7 billion - and we are told the real annualized rate of growth for 1Q2008 GDP was 0.9%, and for 2Q2008 was 1.9%, or that the rate of real GDP more than doubled while it fell in nominal terms...
Anyone? Buehler?
GROSS DOMESTIC PRODUCT: Second Quarter 2008 (Advance)
[snip]
Current-dollar GDP
\tCurrent-dollar GDP -- the market value of the nation's output of goods and services -- increased
3.0 percent, or $105.7 billion, in the second quarter to a level of $14,256.5 billion. In the first quarter,
current-dollar GDP increased 3.5 percent, or $119.6 billion.
[snip]
Technical Note Gross Domestic Product, Second Quarter of 2008 (Advance), July 31, 2008
[snip]
Real GDP increased 1.9 percent (annual rate) in the second quarter (that is, from
the first quarter to the second), following an increase of 0.9 percent (revised) in
the first quarter.
[snip]
I pause to wonder...what, exactly, is a "US automaker"?
My home state has several (Honda, Mercedes Benz, Hyundai) automakers manufacturing cars in the US, but none are considered "US automakers".
Can't we just quit w/ the distinction? The "big three", another misnomer, are hardly that anymore, particularly if measured by profitability, but also even when measured by market share.
Here's the deal: The North American automobile market, w/ some few exceptions, is in a rapid quantitative decline. Which of its participants will survive? The ones that most efficiently make cars that people want to buy. So-called "foreign" manufacturers haved proved that US workers can effectively compete, but not when they are incompetently managed, as has been the case with "US automakers" for several decades now.
You can call 'em US or foreign or whatever. It is a distinction without much difference. It's always the management.
I wonder, how long will it be 'til it's illegal to short GM and Ford?
*rate of real GDP growth
On a related note, I just yesterday finalized a sweet lease on a loaded v6 Accord.
The only GM product in the running was a caddy CTS, however the dealership wouldn't budge much from MSRP (with subinvoice my goal), not to mention their money factor/residual was a rude joke.
Making money for domestic automakers is a challenge on many fronts. Their pension/health care/union/taxes & many other legacy costs burden them financially. Tough to make money in that competitive environment.
I hope they make it.
@tj and the bear -- if GM cuts leases on the Escalade, you can bet on a ton of SoCal folks being in deep trouble.
Should I be concerned about this?
So, How Much Money Are Banks Borrowing Thanks To The Mortgage Meltdown? - The Consumerist
Make my nothingburger a double, please!
In 2010 GM new UAW contract will put them on competitive footing with Toyota and Honda in North America. They have a number of new product introductions that will be very competitive as well. The big hurdle right now is for them to come up with an additional 15 billion in cash to bridge the gap.
I have to confess that the 26% sales drop number is startling. If car sales don't improve for them in 2009, bankruptcy may be the only alternative.
This is very sad indeed
"What the f' are they doing?"
Don't ask, don't tell = sell
It's simply amazing how unions always insist on building McHummergous size low-mileage vehicles. They simply won't back away from competing on cup-holder design rather than technology.
They won't last that long. I stand by my prediction that the "big three" will all go BK within the next 18 months.
scav,
LOL!
tj&bear,
A given - dumping pension obligations - though management compensation will be bulletproof...
a bit OT: Current-dollar GDP -- the market value of the nation's output of goods and services -- increased
3.0 percent, or $105.7 billion.
With an $80B payout in stimulus checks? Just trying to figure out the fraction due to stimulus.
Got 137k miles on my Acura 3.2TL, gonna put another 100k on at least before I give it away...
Look, Americans are realizing that their current vehicle will continue to function just fine, and given that they don't have the downpayment/credit to borrow to get a new car, they don't get a new car. Period.
You should be able to drive a car from any manufacturer for 10 years, at least. My wife drives a 98 Ford Taurus wagon with 125k miles on it and it runs smoothly and the finish on interior and exterior are in pretty good shape considering our three kids.
There's no real excuse for three year trade-ins except conspicuous consumption, IMHO.
I personally drive a 93 Nissan to work; it's pretty beat up but it still runs smooth and there's no car payment.
Look for BK reorganizations that slice off the huge, floppy union pension fat from the books. Then a lean, mean auto industry re-emerges with a whipped UAW and thousands of retirees on their own for medical insurance.
Can we please just put Henry Paulson in charge of GM and end this nonsense?
And then he will get to write a book like Ioccoca dispensing his wisdom.
"Paulson - They Said I Was Lying"
He will prove us all wrong. I'll buy the book.
174K - 96 camry.
Paulson says:
"Must keep rally together until winter".
Whatever works for you, Hank. I'll be here waiting to pick up my winning ticket. I"m not going anywhere.
Should I be concerned about this?
So, How Much Money Are Banks Borrowing Thanks To The Mortgage Meltdown? - The Consumerist
It's all in your mind, whiner.
-Sen. Phil Gramm
My brother was track racing an Audi R8 yesterday. Said it was quite enjoyable.
Maybe if they made more of these, Americans would snap them up and turn this ship around.
Wal-Mart Stores Inc said on Friday it has warned U.S. store managers in recent weeks about the possible consequences of a labor-friendly bill backed by Democratic presidential hopeful Barack Obama that would make it easier for workers to form unions.
But the retailer, which has kept its U.S. stores free of unions, stressed it was not telling employees how to vote.
The Wall Street Journal reported that about a dozen employees who attended meetings in seven states said executives had told them that unionization could force Wal-Mart to cut jobs as labor costs rise, and that employees would have to pay hefty union dues and get nothing in return.
Wal-Mart warns managers about labor bill
| Reuters
Let the beatings continue.
heh, doing my budget for July I found that I had $0.00 for auto-related expenses.
The joys of my new career as a daytrader (and having a paid-off Miata)
Paul wrote at 249:
Should I be concerned about this?
St. Louis Fed: Series: NFORBRES, Net Free or Borrowed Reserves of Depository Institutions
answer
no , not if you own your own home outright,
or have enough savings to cover mortgage
and
are otherwise relatively free of debt
and
can handle a period of unemployment or forced career change
and
are hedged against stagflation
otherwise,
and no insult intended
its time to crap your pants.
KFP,
Amen - my wife asked me once what my dream car was - I replied, "One that's paid for baby, one that's paid for!"
R8 would be great in 1998 when gas prices were under $1.08
These are new car sales right? Used car sales are doing brisk business in major metro's according to 3 to 4 dealers I know well.
NPR this morning: Used Toyota Prius's are selling for MORE than NEW ones, because you don't have to wait 3 months to get one.
Dumb on three levels - at least.
GM: "Help! I've fallen and can't get up."
Cramer: "Looks like a bottom to me. Time to buy."
Won't reducing lease options be the nail in the coffin for sales?
I always saw the rise of three-year leasing as a sign of the decline of the U.S. economy. Lease a loaded Mercedes? Maybe... but a Honda Civic?
Those who could only get it with leases, are out of the market.
There's been a glut of used cars lately. That will change -- for passenger cars, anyway.
Checked out the Google Finance Boards this morning... Some folks are spouting the whocouldanode mantra in defence of GM - "Bottom line is nobody could have seen this coming so fast. Everyone is scrambling to catch up". Huh?? The writing was on the wall 3 years ago. It's just that many of the automotive mfgs chose to ignore it.
Friday, September 2, 2005 - The Detroit News
Big SUV sales take dive as gas costs soar
A simple Google search for "decline of suv sales" will uncover many examples of reports of pending disaster by reputable main stream news sources dating back to June 2005. It's not a case of getting caught by surprise but simply one of automotive mfgs choosing to ignore the warnings. Rather than switch design/production to platforms that the consumer wanted they embarked on renewed price cutting/incentives along with high profile marketing to prolong the life of the high $$/high margin/low regulation 'light truck' platforms. If they had listened then they wouldn't be cancelling new product lines but rolling out new ones that consumers embraced.
"NPR this morning: Used Toyota Prius's are selling for MORE than NEW ones, because you don't have to wait 3 months to get one."
I'm a Prius owner; but I only bought one because I needed a new car anyway.
They should just buy an economical older car, cheap. They can save extra gas by coasting as much as possible, and turning off the ignition at long lights. Might get up to 35 mph out of an old Civic that way.
R8 would be great in 1998 when gas prices were under $1.08
If you can afford those cars, gas prices aren't your main concern. My bro drives one of those subaru rally cars as his main ride. Its all tricked out and fast enough to make me nervous when i ride with him.
Hearing about his adventures made me think very briefly about owning that kind of car. I got over it. It i need one, I'll rent it. I drove a Mazda 323 for the first ten years of my career. Got ridiculed by my older corporate bosses. "You have the cheapest car in the lot!". I did. I'm also retired and they all still work. Since I live in the city and am retired I don't need a car. My wife needs one and we have one car. Paid off 5 years ago. Still pretty sharp. Many years left in it. Perhaps when i get in my forties or fifties I'll get a midlife crisis and want a car like that.
Some people like to work for other people and drive fancy cars. I like to walk and take naps. Whatever works for you.
scav writes:
It's simply amazing how unions always insist on building McHummergous size low-mileage vehicles. They simply won't back away from competing on cup-holder design rather than technology.
Speed writes:
Look for BK reorganizations that slice off the huge, floppy union pension fat from the books. Then a lean, mean auto industry re-emerges with a whipped UAW
are the workers in germany (BMW, VW Porche Mercedez etc) Unionized?
i believe the Japanese workers are largely not unionized but have workers councils and full medical, and up until recently employment security.
i find it hard to believe that the big bad unions are all to blame for GMs problems.
sounds like some are suggesting management is this squeeky little mouse of a victim thats been dragged thru the dirt by the bullies.
the problems are much larger than the UAW
BTW the ford ranger and focus continue to sell comparatively well as does GMs small fuel efficient vehicles
seems like a management issue first and foremost. Unions have been weak here for some time.
I had a 1989 Dodge Caravan LE. (Turbocharged!) When it finally died from a blown head gasket, it had 212,000 miles on it.
It was a hand-me-down from my mother. She cried when she heard the news.
Then I moved to New York, so I don't need a car and I love it!
No mtg on house--check.
Relatively low debt--few thou in C Cards--check.
However, so have a car loan, uncheck.
Already changed career from real estate attorney to other stuff atty.
Could retire unless hub loses federal pension.
How do you hedge against stagflation?
Have a leetle bit of silber and glod.
Like my ford fusion.
Had 2 tauri before.
Last one went 237,000 miles and one before that 204,000 miles and I didn't take particularly good care of them.
Hope Ford doesn't go under.
mock, jiggle the mock-meter
the market can stay irrational longer than you can stay solvent...yeah, whatever, see you in 6 months to pick up my winnings
Yeah, LL, I think American cars get a bad rap... maybe they deserved it thirty years ago, not so much now.
I gotta 1987 Camry with 280,000 miles and a trunk fill of memories
Maybe it's just me, but I don't see how anybody gets laid in a car costing less than $60k.
scav
check
Stranger than Paradise,
What did you come it at on the Accord? I've been thinking about going that route, myself. And how bad were the Caddy residuals?
Pump hard all the way into the close. Push that tape into the GREEN!
"I gotta 1987 Camry with 280,000 miles and a trunk fill of memories" - you keep the bodies in the trunk too? Uhh, I mean...
How is Wachovia up 22% today? Somebody must know something, or else there is a carefully orchestrated pump job going on. I suspect we shall soon find out...
Does anybody else think they are an easy short at $19/share?
Full disclosure: Despite spending several nights sleeping in my Mazda 323, Currently Smoking's thesis is supported by the facts that i spent those nights on my own. Despite my prayers for company. I've never spent the night in a car worth $60K. Maybe that is when the magic happens. Maybe god only listens to people in the right cars. I wish they put that in the big blue book so i wouldn't have wasted my time asking.
JMS,
I didn't say they were my memories, but, if you think about, some of those memories have been shared by everyone at some time or another.
See Asphalt: YouTube -
Come on PPT you can do it! Almost there and you've still got 17 minutes to spare! YOU CAN DO IT, PUMMMPPPPPPPPPPPPPPP!!!!
"Does anybody else think they are an easy short at $19/share?"
I took some at $18.50. WB is sitting on the biggest pile of shit mortgage debt and auto debt in the business, if you ask me. I am surprised they are still alive.
mock turtle,
Two problems:
A) New workers under UAW contracts aren't particularly bad, but the legacy costs on the bozos from 20 years ago are an albatross.
B) Management has, in terms of having a balanced view of what the consumer wants, sucked. They went big into SUVs because that's where the markups over the cost of steel and plastic were largest. (The decision to do this was not entirely unconnected to A), but still, they let themselves get cornered and now the bottom has fallen out.)
12th: It's more of a hypothesis, really. I drive a Honda Accord and chicks don't dig me at all. I'm pretty sure it's just the car.
BG - "went big into SUVs because that's where the markups over the cost of steel and plastic were largest"
Not completely accurate. For many years there were stiff tariffs on imports for LD trucks (maybe still). But since the japs started buiding them in the US, that advantage gradually faded. But they had momentum and it carried...
@ Barely
Glad I'm not alone in my sentiment. The whole 5% interest offer with 5% deposit bonus really piqued my interest. You have to be pretty desperate for deposits to advertise that offer. The whole CFO & risk manager departure isn't confidence inspiring either. I've doubled down twice on my WB puts since it ticked over $17.50.
Cramer was mentioning something about how awesome Steel is at the helm, and how he might create a good bank/bad bank scenario. Any substance behind that idea? I can't imagine they could dump all their toxic crap on a subsidiary, let it go TU, and keep the core biz viable.
Lawyerliz
sounds like yer doin good already.
how to hedge against stagflation?
my guess is ( i've been kicked to the investment curb more than once, so dont try this at home
....yes, PMs and at least 1 months expenses in CASH (plastic bag buried in the garden
but as important, at some point interest rates will rise, so have cash in FDIC insured institutions, half in CDs laddered out 1 to 4 years and be ready for double digit inflation followed by double digit interest rates like the early 80s
and then pile in to bonds ect!
when interest rates begin to drop move into stocks but rotate thru sectors.
btw yeah really like ford (some models...got a focus thats rated 34 hwy that i get 37 mpg (no kiddin), at 70 mph on I 90 when i go to spokane on business.
CSC
Fear not, you own a house.
In Cali i predict owning your own house will be like having a Ferarri.
"Really, CSC, you own this? And your parents don't live here? Really? Sexy!"
"Cramer was mentioning something about how awesome Steel is at the helm, and how he might create a good bank/bad bank scenario. Any substance behind that idea? "
I am not an attorney, by a long shot, but I can't imagine the bondholders being too keen on any deal like that.
Cramer was mentioning something about how awesome Steel is at the helm, and how he might create a good bank/bad bank scenario. Any substance behind that idea?
I don't know how that happens without the FDIC taking you over first.
BG
your point (and others) regarding legacy costs and the auto industry..
point well made
US domestic manufacturers have been at a market disadvantage because of health care costs, while the rest of the G7 have single payer or something similar.
Some day:
"Relax, baby. Don't worry. I'm fixed."
"You promise?"
"I swear, baby, five-and-a-quarter for 30."
"Well OK then, but I'm not in to seconds."
"Me neither, baby. I still have a virgin HELOC."
"Take me home, you stud."
"Sure thing. Split a cab?"
"Cramer was mentioning something about how awesome Steel is at the helm, and how he might create a good bank/bad bank scenario. Any substance behind that idea? "
Steel is there to wind up operations as neatly as possible without inducing panic. Sell off what you can and hand off the rest to the FDIC at the agreed upon time and "we'll keep the seat of undersecretary warm for you old boy". Or he's there to return Wachovia to its proper place among The Glorious People's Banks of the Glorious People's Republic of America's!
I gotta 1987 Camry with 280,000 miles and a trunk fill of memories
Y'mean, like this?
» Trunk Monkey #4 – Thrown off a Bridge – Suburban Auto Group » Blog Archive » Trunk Monkey Videos – Trunkmonkey Training Headquarters
CSC - It's more of a hypothesis, really. I drive a Honda Accord and chicks don't dig me at all. I'm pretty sure it's just the car.
Probably just a bit too much "haze and fog" (as the Chinese would say)hiding you from their view....
"Relax, baby. Don't worry. I'm fixed."
"You promise?"
"I swear, baby, five-and-a-quarter for 30."
"Well OK then, but I'm not in to seconds."
"Me neither, baby. I still have a virgin HELOC."
"Take me home, you stud."
"Sure thing. Split a cab?"
"Nah, I'm a walker baby"
"You naughty devil, you, prrrr"
pastafarian writes:
I gotta 1987 Camry with 280,000 miles and a trunk fill of memories
Y'mean, like this?
wouldn't you just like to kiss her in all the wrong places? new york, chicago, seattle, sacramento, salt lake, denver...
slap
ouch
ok i was just kiddi
Only real men can drive Corollas and still get laid. The rest have to drive a Porche.
I'm going to make a mint on t-shirt sales in Cali that say "I'm fixed".
Human sales will be the bulk of it but i bet i get some canine as well.
CSC
i got a visual from your one act play!!!
i could see you doing the dialog for a full length animated movie!
DonKei writes:
Only real men can drive Corollas and still get laid. The rest have to drive a Porche.
Don't try driving that thing in Southern California, dude. If you're over 25 and not named Kaitlyn, you can be arrested for fraud.
I disagree. There's very little difference in cost or format between getting two back-to-back 3.5-year leases or getting one 7-year 0% loan.
The only difference is that half as many new cars get made and sold.
My first car was a Ford Pinto... AND I was rear-ended right in front of high school, and lived to tell about it.
But I still got laid... eventually. Pity f*ck perhaps?
"Don't try driving that thing in Southern California, dude. If you're over 25 and not named Kaitlyn, you can be arrested for fraud. ;)"
I got rid of it a few years back, now regretfully. I replaced it w/ a Toyota truck.
But the best chick magnet I ever had was a beat-up '72 VW Bug I had in high school and college. It was contortionism to use the back seat, but hey, I, and my partners, were young.
Looks like a long weekend at PPT headquarters, what went wrong, how do we correct it, do we have to have Hank come down for another talk? PPT Manager: "But GM lost $15.5 BILLION today is not an excuse, we've got banks to close this afternoon you guys knew we needed a black number at the close, you knew it and you blew it! You tell Sheila when she calls your sorry excuse, you go ahead and tell her, I've had it with all of you lazy bastards."
I rent cars fairly often. 10 years ago it was tough to find a Japanese car. Now, most rentals I see are Japanese. However, the American cars are the only ones left on the lot if you fly in late.
On another happy note:
Just imagine, in 10 years or so the US and many state governments will have the same legacy benefits payouts that is currently drowning the US automakers. The govt agencies don't have to accrue for it, so you can't see it.
Honda is going to release a 2.2L diesel that gets 52mpg in the European Accord / branded Acura TSX here. 52mpg hwy is a game changer for a real solid 4 door family car!
Make me an offer
OT, but in response to previous posts:
(1) Is turning off the ignition at a long (say 2 mins) traffic light to save gas a good idea?
(2) Has anybody raised conflict-of-interest issues with Steel's move to Wachovia?
BG:
Don't want to turn this into an Edmunds forum, but here's the deal:
sellingpriceEXLV6withNavi27400
Moneyfactor0.00129
36month/12k
residualvalue 17301(56%)
black/black
leasecalculatortherest.
regards
StP
Oh, the caddy CTS residuals were 71% for a 24 month lease. 36 month residuals not as good. But wait... the GMAC money factor on a 24 month lease was 6.1%/2400.
I personally don't think it's a bad idea for seniors to have good health care. Perhaps some of you disagree. But the kind of society some of you envision is not a happy one.
The only thing that will solve the health care situation is some type of single payer, like the rest of the world has.
Mock turtle:
i think the workers at BMW, VW and MBZ are not only Unionized but also entitled by law to seats on the board as in any company in germany, As far as i as german now, could be wrong but i guess i am right..
Yoringe
good point
thanks
Mock turtle,
also don´t forget there´s no legacy cost for health care for the pensioners here in Germany. Any worker has to be covered by law, same goes for pensioners, they have exactly the same coverage.
Cost is split 50/50 for employer/employee and deducted from salary straightaway. Pensioners have a small amount deducted from their state pension.
Same system with state pensions, compulsory as well, deducted straightaway from salary, 50/50 paid by employer/employee. Many do get some additional company pension though on top of that.
Strange, I do feel like writing from some socialist country now...
Mock,
The law of "no free lunches" still applies, though. Compulsory universal coverage is being paid for in those places by somebody else. It is, in effect, a subsidy to the overseas manufacturers vis-a-vis the "domestics". TANSTAAFL.