CNN Money reports that Ford, GM and Toyota have all downgraded their forecasts for '07 U.S. automotive sales. Ford estimates total sales at 16.1m, GM pegs the number at 16.5m and Toyota reckons it's 16.3. In any case, the stats compare with last year's 17.1m sales. The downturn puts GM between a rock and a hard place; the company's inventories are high and they're set to crank out more vehicles in this year's third quarter than they did in '06. As reported here, GM faces a stark choice: up incentives (killing margins), cut production or… both. While GM's spinmeister Paul Ballew danced around the looming nightmare, Ford's $25m man made no bones about the need for realism. "The most important thing is to get to the real demand. We don't want to drive demand with big incentives. All you are doing is pulling it ahead, so we need to get to the real fundamental demand, and have the vehicles priced for the demand." Meanwhile, Toyota's sitting pretty. Declining market be damned; they reckon they'll increase '07 U.S. sales by five to six percent.
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well, if cars last longer than they used to, and the new ones are ugly, what do you expect?
Good point NICKNICK. Autos are lasting for almost 10 year now up from 7 dot something only 10 years ago.
Let’s see…2.801 are adding cost per unit to improve quality/durability, sucking out their margins…Adding incentives to move the metal off the lots loosing $1K per unit…2.801 should reorganize as an IRS 501(a) non-profit charity heath care provider.
It’s like killing yourself via paper-cuts or perhaps a small pen-knife.
The cars are too heavy, too large, to cumbersome, to ungainly, too hard to maneuver, and consume too much gasoline because they are overpowered.
Even with modern production methods, 16 or 17 million of anything takes a lot of planning for material supply, labor and so forth. Although it’s in the consumer’s interest to have a constant oversupply as the manufacturers fight for market share, it makes it impossible to operate a company when you don’t know how many widgets you should plan to produce in the third quarter. At some point, you’ve got to guess at what you can sell and then plan for that number, hoping that you haven’t under- or over-guessed.
It seems apparent that the total “supply” capability now is probably at least 115% of consumption, so somebody gets left without a chair or figures out what to do with the extra product.
Sorry automakers, but I’m running our ’95 Regal, which mostly takes my wife to the market, and our ’96 Elantra until they both die. If one of those dies, we’ll just live with the other one. I just don’t want to be stuck with a payment for a gasoline-burning car during the next big recession, energy crisis, what have you.
My next big purchase is a tandem bike.
OK, and they are losing money on every vehicle they sell (yesterday’s TTAC: Chrysler — $1,111/vehicle,
Ford — $1900/vehicle).
So, why not take a strike? A long one.
You want to get to demand FORD?
Build a car people want to be seen in, and want to drive.
IMO if they drop from 17m to 16m that is hardly a plunge, but I do believe that we will see a plunge over the next 12 months.
GM announced within the past hour they are upping the incentives in August, particularly on their trucks. Los Angeles Times automotive section on 8/8/07, brand new PT Cruisers with AC and CD: $10,990.00, new PT Crisuer “Touring edition” with Automatic, all power, according to the ad, “over 50 in stock” all priced at $13,800.00″ MSRP: $18,980.00. Therefore a new fully loaded PT Cruiser can be had for nearly 30% off the sticker price. No wonder BK is looming in their future
And let’s not forget the wonderful sales and service experience. It’s so awful that people, who would otherwise buy a new car, hand on to their cars until the wheels fall off.
Most of the new cars are too heavy, and too full of a bunch of electronic technology crap that will cost a fortune to fix once the car hits 10 years old. To avoid it, you have to buy a little crackerbox car.
I’ll hold onto my Grand Marquis and my wife’s old Corolla a while longer.
The new car buyer is a short term owner – which is why they sell the crap they do.
I have never been a fan of Toyota’s design language: It is pedantic; derivative of other automakers’ work; and mostly, just plain boring. Though, I *AM* a fan of the TPS (Toyota’s production system). A -6% (17mln to 16mln) market shrink would be more easily handled by TPS than it will be by the other automotive manufacturers selling in the US. More model refreshes, common platforms, flexible model and volume mix at assembly plants, build to market demand philosophy, (mostly) satisfied employees and suppliers, legendary quality, and (not least important) customers satisfied with the Toyota owning experience returning to dealers lets that company kick our Big ~2.8’s rear ends.