The New York Times reports that GM's November sales fell 10.9 percent compared to last year, with every one of their eight U.S. brands reporting diminished turnover. Chrysler and Ford fared better– a 2.1 percent drop and a 1.3 percent gain respectively– but it's highly likely that both companies turned to low-profit fleet and commercial sales to prop-up their American business. Worse still, U.S. new car sales in general only dipped by three percent, indicating that the domestic automakers continue to lose market share to their transplant rivals. "All three major Japanese automakers not only increased sales during November, but all reported their highest sales ever for the month… For the second time this year, Detroit accounted for less than half of the United States market." Both GM and Ford attempted to calm camp followers by announcing more production cuts. The General said it will build 950k vehicles from January through March, representing an 11 percent drop from last year's total. Ford will build 685k vehicles in the first financial quarter, reflecting a seven percent decline. Privately held Chrysler remained shtum, but analysts expect it to follow suit. The cut backs are as we predicted: a tail-chasing exercise that spirals Detroit towards disaster. Only better product can save Detroit, and it may already be too late.
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Given fewer brands to support—I think Ford has a better chance to right-size.
GM on the other hand—with so many brands and models to support will have a much tougher time. As has been said multiple times—until GM makes the tough decisions around cutting brands—their model is highly flawed. Really—how tough can it be to get rid of Saab ?
Agreed,building a better product is the only answer for long term survival.I believe Detroit is doing just that.How about the Malibu or the CTS or the Silverado,the Fusion?
Building more cars/trucks than you can sell is suicide.Cutting production,while painfull,is the only answer.
We in the hourly ranks are getting beat up really bad,thats lfe as an autoworker.
Now I might start to worry if I saw real bleeding from the management side.That ain’t happening.
When will the big 2.801 get it through their thick skulls that the Japanese didn’t get where they are by luck. They didn’t sneak up on Detroit one day and mugged them of their market share.
The Japanese (Mainly Toyota and Honda) started small and grew and grew. They refined and honed their brands so they stood for something. They built something more valuble than a good car, they built a solid reputation. One which could be trusted.
Organic growth is the real path to prosperity. It is harder and more longevious, but it reaps the best rewards (as with many things in life)….
There’s more to it than only building a better product. mikey brings up the Cadillac CTS. Yes, I kind of like this car and can certainly see why somebody would want to buy it.
But I drive around here every day and see that Cadillac drivers are basically old folks who decided to splurge, instead of getting a Crown Vic or a Buick. I can’t see this crowd behind the wheel of a CTS.
It is going to take some time to change the brand image of this car, if they really want to attract buyers who aren’t collecting Social Security. At least where I am down South.
Building the better machine is only part of the battle. And it may be the easier part, too.
Do you think that the American automakers will eventually see their sales stabilize? It seems there will probably always be someone willing to buy their cars over anything else because of brand loyalty or whatever, however they are just making too many cars for that. When they cut enough models and production it could even out, provided they don’t go bankrupt first.
If GM could find a way to keep Chevy, Cadillac and Hummer in North America and split off the rest in a separate (but doomed) group, they would likely become a strong company again.
It’s incredibly hard to maintain your profits when you build four to six substantial variations of the very same vehicle. GM is literally giving the lion’s share of their money and resources to second tier brands. There’s no reason to do it other than that, for now, the legal ramifications make any other alternative difficult to impossible.
I don’t think Detroit 2.8 sales is going to stabilize, personally. I think that Detroit is going the way of Birmingham, England (the loss of virtually all mass-production of automobiles, and the loss of any locally owned mass-production automobile companies).
We’re following Britain’s steps in this regard about 20 to 30 years behind, here in the US.
It should be highly interesting (and frightfully sad) to see what happens if/when we get into a recession in the US, which will mean a worldwide recession (since Americans buy 20% of all worldwide goods, but are something like 3% of the worldwide population).
So, when Americans stop spending (as in a big recession), the competition for the few new vehicle sales is going to be samuri-sword sharp (and I use that image advisedly).
The ironic thing is that anyone hoping to retain virtually any US auto jobs in a stable automobile company pretty well has to look to purchase a Toyota, Subaru, Honda, Hyundai, Kia or Nissan.
Glenn126: “The ironic thing is that anyone hoping to retain virtually any US auto jobs in a stable automobile company pretty well has to look to purchase a Toyota, Subaru, Honda, Hyundai, Kia or Nissan”
So…I am supposed to adhere to your 30 year Detroit / America deathwatch schedule and only buy Japanese / Korean ? I think not.
The only irony I see here is your self-defeatist attitude toward Detroit and the US in general. If we took your attitude—-we mind as well just give up and become part of the EU now.
umterp85 the vast majority of people in America have absolutely no connection to the auto industry. Believe it or not, for everyone living outside of Michigan, America is not synonymous with GM and Ford. So an observation or a belief that GM or Ford is going under is not a self-defeatist attitude for us, nor does a negative view about GM and Ford or a positive view of Toyota and Honda somehow correspond into being against America and for Japan. Although this strangely twisted logic seems to prevail in Detroit
Anyone else need to look up “shtum?” Thanks, RF, for the word of the day. Either you have a scary vocabulary or a beat up thesaurus on your desk.
As for the subject at hand, I never know what to make of sales figures for one month versus the same month last year. It just seems a little like saying a ball player is batting .500 because he is 2 for 4 in a game. Small sample sizes do not equal statistical significance. I prefer to look at trends (Frank’s analyses, for example) because they more accurately reflect what is happening over a longer term.
Actually, Ford was up/flat for the month by 0.4%. Not sure where NYT’s (or your) numbers are coming from.
Sherman Lin—-First—I am not one of those So Goes GM…So Goes America types (the free market drives not GM)….and believe it or not I do not live in Michigan or have any relatives connected to the industry.
That said, my issue is with Glenn126’s logic…his doom / gloom “worldwide recession”–“Americans stop spending” post and his connection of this doomsday scenario advising Americans to buy Japanese /Korean.
Net, this strangely twisted logic (as you put it)seems to prevail for those that have been called import bigots.
Thank you Sherman Lin, you took the (defense) words right out of my mouth. Nowhere will you see me “want” to see Detroit fail. I do live in Michigan (albiet northwestern Michigan) and yes, even “way up here” in the lala land of tourism, our economy still is tanked. Nobody in their right mind would want that for their state or town, would they? We have lost virtually all of our car parts plant which used to flourish up here, believe it or not. The one Tower auto parts plant which survives had it’s parent company just come out of bankruptcy and Toyota work has saved the day for now, but the plant is losing 2.8 work and may lose Toyota work due to the distance from Toyota factories. (Toyota were sort of the heroes of the workers for actually asking Tower of Traverse City to do a contract, even during bankruptcy when Tower was apparently not legally allowed to “ask” for new contracts. Now, how stupid is that, that a company being reorganized apparently cannot ask for new work?!)
But the reality of what is going on is – reality. So I comment upon it.
If Detroit want to survive, they need to go back to square one.
Read Demming. And follow Demming. Top to bottom. No excuses. Including the dealers.
Next, duh, square two.
Allow car guys / gals to design cars which appeal to them because this will then appeal to other people who might wish to buy a car.
Step three.
Clean out the old deadwood. Get rid of the cars and trucks which are wrong. We all know which ones they are, don’t we?
Step four.
Look ahead. If we are approaching peak oil, be part of the new solutions (notice: plural), not part of the old problem. Develop and bring out new ideas for propulsion. Think outside the box.
Step five.
If the companies survive long enough to regain the confidence of a gun-shy public tired of “promises promises” then watch the profits roll in.
Step six.
Don’t get complacent again.
Ford’s sales were up thanks to commercial fleet units. Retail and rental fleet sales were both slightly down.
From the transcript of Ford’s November 2007 conference call:
“Let’s get underneath the skin of the November sales variance. Let’s have a level set here. Earlier, I said Ford and Lincoln Mercury sales were up 1%. Retail sales were close to a year ago. They fell short by 4,000 units. That’s 3%.
Total fleet sales were up this month, for the first month in a long time. They were up 12% and that has two pieces. The daily rental volume was down 1,000 units, 6% from a year ago. Commercial and government fleet sales were up 25%. It’s a big variance in percentage terms. In volume, it means 7,000 units.
So, what we have is retail, down 4,000 units; daily rental, down 1,000 units and then total fleet volume, up 6,000 units or 12% with the 7,000 unit increase in commercial and government fleet sales.
Our fleet mix in November was 32% compared with 28% last November. Year-to-date, our fleet mix is 30% compared with 33% in the first 11 months of the year ago. Year-to-date, we’ve reduced daily rental volume by 143,000 units compared with last year and our share of the daily rental market is 16%.”
http://seekingalpha.com/article/56251-ford-november-2007-sales-call-transcript?source=yahoo
Dear umpterp85, you haven’t lived through a recession as an adult yet, have you? I’m not “wishing” this upon anyone, either, just so you know, partner!
I was making a comment on the fact that while the 2.8 are busy dumping and exporting US jobs, the so-called transplants are bringing new jobs in. I recently read in a book “Death of Detroit” that GM exported the same $$$ amount of jobs-value over a decade from 1990 to 2000 as Toyota brought INTO the United States.
Obviously, if the 2.8 fail, due to their currently being in extremis and the upcoming recession (read the internet economic news, such as http://www.dailyreckoning.com, for a clue about this – ignore the mainstream media which follows the lead of the Wall Street crew), the resulting automotive manufacturing landscape would only include the so-called transplants.
I was also chiding the Detroit 2.8 for LACK of confidence in their home country, by exporting so many jobs while their foreign competitors send jobs into the United States. S’alright? S’alright.
Glenn–partronizing comments aside, I’m no youngster (I’ll gove you a hint…I was born during the Kennedy Admin)—and yes I have lived through recessions….and lived through the disaster called Jimmy Carternomics
Gloom and doomers like you have been predicting depression since Reagan’s first tax cuts and it hasn’t happened yet. And for those that are predicating this doom and gloom based on the current credit crisis—-well the current crisis has nothing on the S&L crisis of the 80’s. The country survived and prospered during this crisis—we will now. BTW—I do not frequesnt the mainstream press either—WTH do you think I come to this site eh ?
And if there is a drastic economic downturn as you predict—-why do you automatically think that it will continue to be economically feasible for the transplants to continue producing here ??If it becomes cheaper to produce elsewhere…they can pull out of US production and take the write-off as easily as the domestics can.
Gosh, Umterp85, I’d sure like to know what “Jimmy Carternomics” is.
The fact of the matter is, rising oil prices drive inflation. Carter was President during a time of sharp oil price increases. Consequently, there was considerable inflation. Carter’s only failing in energy policy was that he was elected President 4 years too early.
Unemployment rose, too. However, during the Carter Administration job creation actually increased. What hurt Carter was that the number of people entering the job market (young people reaching adulthood) increased even faster and none of the Boomers were starting to retire. This population bolus subsided as Reagan entered office. Again, Carter screwed up by taking office 4 years early.
There’s a piece in my hometown paper today, relegated to page 3 of the Business section. It concerns the national debt, which saw its most dramatic growth during Reagan, Bush 41 and Bush 43 (never mind the hidden expenses, like the way our National Guard units have been gutted of their equipment). We are at serious risk of seeing Federal expenditures spin out of control not because of any Carteresque policy decision but just because rising interest rates could dramatically increase the chunk of the Federal tax dollar which goes to debt service, which is something that responsible economists (i.e., those that think the Laffer curve is a laughable concept) have been cautioning us about since the early days of Reagan’s “cut, let slide and borrow” budgets.
Now we reach a point where maybe the Chinese aren’t so interested in soaking up loose dollars any more. What do you suppose this will do to the dollar? What do you suppose this IS doing to the dollar? This is one of the things that’s fuelling oil price increases.
Factor in our loss of prestige, internationally, with a stupid, counter-productive and poorly fought war, add explosive Chinese and Indian expansion and comfortable economic factors in Europe and what do you suppose our chances are of leading the world out of a recession?
If there’s a problem with Glenn126’s gloomy assessment of our future, it’s that it’s too optimistic.
KixStart: “Gosh, Umterp85, I’d sure like to know what “Jimmy Carternomics” is”
Well…lets start with 18% interest rates (you think they are rising now pal…did you even try to buy a house back then ?)—-12% inflation and gas lines for as long as the eyes can see. Carters stewardship (or lack there-of) of the US economy makes the current idiot in office look like a genius. And like the current occupant—we were a laughingstock abroad. Carter should have stuck to pounding nails in dilapidated houses, beating killer bunnies, and helping his brother Billy’s brewing business.
But you know—-the country did not buy into Carters malaise posture—we elected a guy called Reagan who led us out of Carter’s morass—not with luck as some intellectual libs would like to posit—but with real change in policy both economically and abroad.
I pray that our next president (could care whether this person is democrat or republican) can clean up the mess he / she is being given like Reagan did in the 80’s. Americans have dug out of messes before—we can do it again—despite what doom and gloomers like moveon.org think
@KixStart:
Now we reach a point where maybe the Chinese aren’t so interested in soaking up loose dollars any more. What do you suppose this will do to the dollar? What do you suppose this IS doing to the dollar? This is one of the things that’s fuelling oil price increases.
As an avid fan of fossil fuels and Exxon-Mobile stock, I must say that current oil prices are surprising. Economist Julian Simon was very prescient in predicting that most natural resource prices decline over the long term (10+ years). I wonder if he will (finally) be proven wrong about oil?
Note that I don’t think that there will EVER be oil shortages – every such prediction by Malthusian morons over the years has been proven laughably wrong – I’m just uncertain as to whether prices will ever decline.
Umterp85: Well…lets start with 18% interest rates (you think they are rising now pal…did you even try to buy a house back then ?)
As a matter of fact, yes. I was also lucky enough to put money IN the bank in CD’s at 18%, effective.
And it wouldn’t matter WHO was in office 1977-1981; oil-price driven inflation and exploding workforce would have made ANY President look bad.
Of course, Carter understood that we should get our oil dependence under control and the laissez-faire policies subsequent let terrorists get rich and attack us with our own money.
“But you know—-the country did not buy into Carters malaise posture—we elected a guy called Reagan who led us out of Carter’s morass—not with luck as some intellectual libs would like to posit—but with real change in policy both economically and abroad.”
Not hardly; falling oil prices and slowed growth in the workforce “led us out of the morass.” And now we’re going to pay – and dearly – for Reagan’s fiscal irresponsibility, a tradition proudly continued by Dubya.
KixStart—I have NEVER seen anyone defend the failed presidency of Jimmy Carter like you have.
Historians who weigh these things with a hell of alot more factors than can be discusssed here have rated Carter an abject failure on just about every dimension you can measure. Every living president (including Clinton) can’t stand the guy because he comes off as a know it all who is free to criticize them while in office even though Carter himself failed miserably. Its like GM giving Toyota advice on how to run their business.
He also presided over one of the worst era of car design in American automotive history—wasn’t the Chevette launched on his watch ? I blame Carter for that to :)
That said—the guy can pound nails with the best of them.