Car manufacturers are transitioning from one disaster to another, as the economic meltdown makes high gas prices seems like a blessing. Automotive News [sub] reports that two of the top prognosticators in the biz have looked at the proverbial tea leaves for the year’s U.S. sales figures and come-up with a soup tureen of not good. J.D. Power says 13.6 million. Global Insight says 13.8 million. GM says who called the whole thing off? Nigel Griffiths, Global Insight group managing director of global forecasting, has the answer. “We are moving from a liquidity crisis to an insolvency crisis right now. There is increasing evidence that this has affected the real economy, and as we see the automotive industry as the heart of the real economy, we are really taking a hit now.” As opposed to the fake economy (i.e. sub-prime loans)? Makes sense to me. But here’s the weird part. “It’s worse than if we saw oil at $200 a barrel on a sustained basis. At least with that, there was a transfer of wealth to countries like Russia that are inclined to buy automobiles.” So much for GM and Ford depending on foreign markets to stay afloat. George Magliano, Global Insight director of automotive industry research for North America, says you ain’t seen nothing yet. Magliano said it could take until 2013 for sales to recover to 2006 levels.
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Here you now find that you can’t finance folks who probably should not be financed in a “normal” world. “upside down” ? No deal. Poor credit…no deal…
No home equity to buy with…no deal, and this one attracted a lot of quality buyers who were “cash” at the dealership.
Looking around, I see a lot of new cars on the road. Used cars are not worth much. In short, everyone who could qualify for a new vehicle has, and is driving it. I tried to sell a used car recently, and it was a horror…anyone who CAN “sign and drive” has, so why go used ?
It will take a few years for these cars to wear out..and until then, no new sales.
Ow. I pass a Cerebus dealer every day, and while they appear to have moved a lot of trucks (?), there is little movement otherwise.
Meanwhile, all the folks I know who are “doing OK”, are heeding the news-propaganda (or are scared by it) and no one with means is planning anything anytime soon.
My wife and I are not cutting back. It’s still a shock each month when I pay off the credit cards!
However what would make us cut back is how the election turns out. Raise our taxes and we’ll cut back and stop working as hard. ;)
I’m with Sppedlaw here. There’s an appalling number of new, expensive cars driving around, and many owners shouldn’t have gotten them in the first place. Just like the housing market, sales were inflated by easy credit.
My guess is that small garages will see business rise, as more people keep cars longer.
@airhen: if taxes are the major issue for you, here’s a simple solution: if you’re making above $250,000 per year, vote for McCain. Otherwise, vote for Obama. Obviously, their spending programs should also influence voters choices, but for those who want to vote based on the candidates’ tax plans, that’s what it boils down to.
The one ray of hope at the moment is gasoline pricing; it’s coming down fast, thanks to the current collapse of oil pricing. Whether this decrease (most likely temporary) will kick-start the old SUV buying preference again is unknown. But it will give relief to owners of those vehicles.
The real problem is House values became INFLATED due to the ease of getting credit for high loan amounts years ago.
The housing values need to drop. I’m starting to thing the government shoulda let the system adjust by itself (read: fall apart).
Problem is, no one wants to be denied credit and no one wants to risk losing their pensions or retirement savings.
This whole system needs to be recreated and the FEDERAL RESERVE abolished.
Flashpoint speaks nothing but the truth.
It’s sad that at 27 years old in DC in 2006, people actually thought I would buy a “starter home…err…condo” at $350,000. A townhome in an area I looked at LAST year for $412,000 is now listed at $249,000.
I’m glad that the market is correcting itself.
I’ll wager that the automakers were praying for oil to go down in price. Well, they were given their wish, in nastily ironic fashion: oil prices are down, though only because they’ve been dragged to hell with the rest of the market.
Careful what you wish for…
High oil prices are good for the right automakers – the old inefficient car needs to be replaced with a new efficient one.
I think OPEC is trying for an $80 minimum per barrel basement, and will cut back oil output until they reach it.
Did I hear someone in the back of the room say “those OPEC idiots have throttled the goose that laid the golden eggs”?
Wasn’t “just” them, my friend.
In related news (well, not really) gas has dropped 30 cents a litre here in Montreal. It’s now down to 1.09 a litre, which is what it was at about a year ago. Could it be a sign? A sign of what, I’m not really sure.
A few months ago, diesel was 60 cents more a gallon in northwestern Michigan, compared to gasoline. $4.75 vs. $4.15.
A few weeks ago, gasoline and diesel were virtually the same price. $4.
I filled up my Prius with a week’s worth of gasoline (4 gallons, 17 mile commute plus other driving) at $3.47 this morning, escewing the ethanol polluted stuff I could have gotten for $3.44. I noticed that diesel is again about 60 cents a gallon higher than gasoline.
We were being totally ripped off with gas being the same price as diesel.
“We were being totally ripped off with gas being the same price as diesel.”
What do you mean, menno?