Even as Detroit races to turn-off the production spigot, dealer inventories are building to abandoned airfield levels. You want to talk trucks? In an industry where a 60-day inventory is ideal, every single GM truck has over a 100-day supply; some many more. While all three automakers swore they'd sworn off incentives (and blamed the move for reduced sales), that was then, this is now. Chrysler's Jim Press signals the fire sales to come. "It is inevitable from our standpoint because we have pricing pressure in terms of cost from steel and plastic," Press said during an interview with Dow Jones Newswires. "Incentives will be a key part but the focus will shift on those products that are facing the headwinds, such as trucks and SUVs, rather than those benefiting from the tailwind like cars." Chrysler? Cars? Tailwind? What tailwind? Anyway, the bottom line: "Chrysler's average incentive per vehicle sold in the U.S. in May was $3,714, the highest figure among the six top-selling auto makers for the month, according to Edmunds.com. Ford's average incentive totaled $3,326 followed by GM at $3,477. Nissan Motor Co.'s (NSANY) average U.S. incentive in May was $2,090, while Honda Motor Co. (HMC) was at $1,256 and Toyota was $1,045."
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OK, so tell me again how the AA strike cost GM so much money.
I wonder just how cheap Chrysler vehicles will get if they go bust? I don’t have an urgent need for a big vehicle, but for camping a pick up would be handy. If I can pick one up for a song, I just might…maybe.
The thing about the first fire sales; they worked. At least in the amount of vehicles sold as a direct result.
Because GM spent billions to get their large SUV and Truck plants running. But if the plant isn’t making any cars then the plant isn’t making any money in return.
The cash going out the door to get the plant operational doesn’t effect earnings. Instead, the amount spent to maintain the plant, employ people at the RenCen, and all the depreciation of GMs assets affect earnings.
Granted, depreciation doesn’t effect your cash flow (since the cash was spent up front). However, Bob Lutz’s salary along with all those folks in that building in Detroit suck up massive amounts of cash.
I like a new diesel duallie.
Call me when they are 75% 90% off. Slightly used is OK. Don’t care if they are BK.
Any data for the Germans? Does the Toyota number include Lexus and Scion?
Gave our four year old daily driver to our college age son in 2003 (he ruined it in 18 months) and needed something cheapo to replace it if we were going to do it. No point getting used if you can buy new for 1/2 price.
Since GM yanked the rug from under Daewoo USA when they bought the South Korean company for a tap dance a shuffle and shaboom for pennies per Won, I figured I could snag a deal too. (GM bankrupted Daewoo USA by simply refusing to sell them any new car, for that matter, they refused to sell them any PARTS for a year until the courts demanded it). All the Daewoo dealers went bust or ate dust.
A HUGE and I mean HUGE Ford dealer in northern Ohio had new old stock 2002 Daewoo Nubira sedans with air and automatic for $7800, virtually 1/2 of the $14,800 MSRP from a year before when Daewoo was in business. I’d watched the ‘net and knew that parts were flowing again.
Mrs. and I drove to Ohio, test drove one, bought it and drove it home. It’s actually been one of the more reliable cars I’ve ever had. Our youngest son now runs it and it’s been a good car, albeit “cheap”. But modest is what the car is even named; Nubira means “It’ll get you there” in the Korean language, apparently. It’s like a modern-day Ford Model A. And the problem with that is, what? For $7800 with 25 miles on it?!
But that’s with the actual manufacturing company still in biz (albeit selling the restyled version of the cars as Suzuki Reno and Forenza, and the smaller Daewoo as the Chevrolet Aveo).
If Chrysler goes Tango Uniform and chapter 7 bankruptcy, you couldn’t PAY me to take one off the dealers’ hands. Same with GM.
Nick R:
Around here, you can get a new Ram for $11,999. You can’t hardly find a Yaris that cheap. Go for it.
12K for a new Ram? Where do I sign up?
Yea, but isn’t it 12k for some white stripper with crappy wheels and plastic grill? How much for an adequately equipped quad cab with A/C and metallic paint? 14k would be nice!
who thinks the fire sales will work this time?
wait for the liquidation sales.
I’d pay 8K for a new, well equipped Ram quad cab from a BK Chryslerberus.
Although, currently there are sweet deals for used trucks. And with big 2.8 incentives and gas prices growing, look for used prices / residual values to further crater. Bottom line: If gas prices and environmental damage mean little to you, there’s never been a better time to buy a truck-like vehicle.
Oh, my god! [Detroit’s] having a fire! sale. Oh, the [cash] burning! It burns me! Evacuate all the [employees, permanently]! AAAHHHH!
There has never been a better time to buy any vehicle. And, I think there will never again be as good a time.
# Captain Tungsten :
June 7th, 2008 at 9:25 pm
There has never been a better time to buy any vehicle. And, I think there will never again be as good a time.
Mark my words, you haven’t seen anything yet. Bookmark this and revisit it this time next year.
It will prove me right.
I looked through the new car ads in the newspaper today, every single dealer and every manufacturer that offers fullsized SUVs and trucks is firesaling them now.
Legends Cadillac has Escalades knocked nearly $20k off sticker. ABC Nissan is giving away Titans for $18k (a friend bought one at this price last week, thousands off MSRP buys plenty of fuel). Chevrolet dealers have extended cab Silverados for $17k.
If you need a truck or want one, it’s certainly a buyer’s market right now.
There might not be much risk in buying a D3 car post-bankruptcy (theirs, not yours). Once the price has fallen to reflect additional depreciation from going Chapter 7/11, the huge “installed base” of GM, Ford and Chrysler products should insure the continued availability of parts from third-party suppliers. Indeed, the right to license “Certified to Meet GM Specifications” labels would be a valuable asset for a bankrupt GM without its own factories.
Mark my words, you haven’t seen anything yet.
In respect to most of the domestics, absolutely 100% right. They won’t be able to cut production quickly enough to trim the inventories.
Those inventory numbers are a function of many they are selling. As sales fall, the same quantity of trucks will represent more days of inventory. So that number is bound to get worse.
Most of the transplants, not so much. They are more flexible and can move things around. Once they burn through their extra inventories, they’ll just produce less and charge similar prices to what they are now. If anything, the fuel misers might see some price increases.
Very little of this malaise is taking place in my home base of Western Canada so this is interesting to watch.