The U.S. new car market is officially dead in the water. Well, not officially officially. As the UK’s Guardian points out, December’s best selling days are its last. But the paper quotes Edmunds projection for the month’s sales, and it’s an unmitigated disaster. Edmunds expects December auto sales to crater to 9.8m units. “That would represent a further decline from 10.2 million units in November, which marked 26-year lows.” Sales analyst Jesse Toprak expects U.S. new vehicle sales to fall by more than 38 percent in December. More specifically, “Chrysler… is expected to lead the industry decline with a more than 45 percent plunge in December sales… while GM sales are seen down 39 percent and Ford sales down 34 percent. Toyota Motor Corp, Honda Motor Co and Nissan Motor Co are all expected to report declines of about 40 percent.” BarClays Capital analyst Brian Johnson predicts bad things for Detroit’s hometown hero. “We continue to see little equity value in the restructured GM. A greater decline in sales raises the possibility for additional funding needs.” Any guesses who pays that bill?
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GM can’t “make it up in volume” anymore.
Chrysler sales will be perked up slightly by the 3,000-5,000 or so buyout ex-employees who were required to select their $25,000 vehicle BEFORE Dec. 31st. as part of their buyout package.
No, Robert…the use of the term “unmitigated” is trademarked by Sweet Pete….you are treading upon his territory.
Re. the tanking of new car sales….and the tanking of the home mortgage industry…and By God everything else…has it ever occurred to anyone how our entire economy is built on a house of cards? Who was that guy who was recently busted for running a Ponzi scheme? Well…I argue the entire ECONOMY…built upon “credit” is a giant Ponzi scheme. Why aren’t the bankers…every last one of them, thrown in jail? And seriously…why are individuals so seduced by credit? I pay cash for my cars…quite simply because I cannot STAND the “SLEAZE FACTOR” involved in dealing with these sleazebag finance types. I truly do find it totally distasteful even talking to them. And no, I don’t “own” a home either….but when I do, I will do so just as I’ve done w/ cars. To MOST people that is considered crazy. But then again, look at the economy…an entire INDUSTRY built upon “borrowing”. And our National Debt to the tune of 9,000,000,000,000 and growing.
Am I the only one who finds the state of things totally and without a doubt morally repugnant?
If these car companies entire existence is based upon customers “borrowing”….then let them all go bankrupt for all I care. Maybe the Amish can teach us a thing or two….that is, live within your own means, and don’t take more than you give.
Merry Christmas all you greedy bastards!! :)
@luscious: we’re already at $10.6T on the debt.
The Amish are indeed wise, and make great furniture and baked goods to boot. They way they responded when that asshole in Pennsylvania shot up that school a couple years back is worthy of note, particularly for certain of our leaders.
If the US auto market stays below 11 million units per year for an extended period of time then the consequences to the industry will be extremely severe. Not just the 2.8, but every auto makers is going to be in big trouble. A mass extinction of makers like happened in the 1930 could easily happen again. Some will of course survive, but only by closing plants and laying off massive numbers of people. No industry or company can easily adapt to a 30-40% instant decline in demand.
All of which makes it weird that GM still hasn’t released plans to shut down extraneous brands. If GM couldn’t afford to keep ’em all alive in 2007/8, how can they do so in this new environment?
Thats funny. I went and test drove a ZO6 yesterday and almost had to threaten to leave the store before they would hand over the keys. All the Vettes had been “discounted” via a red tag sale. What a joke. The discounts were about what I would get through a company-employee discount.
I later got on the internet and found some dealers actually doing what is necessary to get rid of inventory, but obviously, the message has not gotten to all of the dealers.
I go back Friday with my wife (it will be her daily driver) since I said I would but I doubt the same dealer will get my business.
And ditto what luscious said. All the loans made by unscrupulous mortgage and banking institutions is enough to make anyone sick. They should all be hung out to dry, not bailed out with my hard earned money.
@luscious
Wait until you hear about this ponzi scheme we call Social Security. You’ll really get your undies in a bunch!
It will be interesting to see how this pans out.
Edmunds estimate has been optimistic on GM lately.
IIRC they have also been pessimistic on Ford.
Bunter
Inreresting that the last days of December are the best in sales. I’ve long wondered whether the popular wisdom- buy just before the end of the year before the books close and dealers are desperate- is that true. Do dealers count on this influx in the last two weeks of December?
Because it seems to me January and February are deeper darker and colder. People are not in a buying mood. Dealers must constantly clean snow off the units, and wash every unit after a test drive. Bills are now coming due, taxes are coming due, no one is in the mood to stop in the store and put up with baloney. I now wonder if Jan & Feb are the best time to buy a car, new or used.
So, having said it before on TTAC; from 1929 to 1932, the new car sales market in the US plunged to one quarter of what it was. Using 2007 to 2010 numbers, that’d be going from 16,000,000 units per year to 4,000,000 units per year.
With that, I seriously doubt that the government would continue to bail out GM or Chrysler. PERHAPS given that Ford will hopefully make it through part of 2009 before showing up with the begging bowl, Ford might be given the last of the taxpayer handouts before that tap shuts off.
Yes, indeedy, the 1930’s saw the decimation of what was a healthy automotive competitive market int the US and also much of the world.
Only the strongest (not necessarily the biggest) will survive if we follow the same path to disaster as the Great Depression (which, to some extent, it unfortunately looks like we are treading).
luscious: Why aren’t the bankers…every last one of them, thrown in jail?
Because it takes two to tango, and no one held a gun to borrowers’ heads and forced them to take out car loans and mortgages they couldn’t afford.
You don’t need a finance degree to know that if you are making $60,000 a year, you cannot afford a $500,000 house, unless you bring about $360,000 in cash to the closing. But lots of people were happy to do it anyway.
Now that the game is over, they are crying foul. They get no more sympathy from me than I give to the lenders.
John Horner: Not just the 2.8, but every auto makers is going to be in big trouble. A mass extinction of makers like happened in the 1930 could easily happen again.
Very true…what’s interesting is that, in 1929, there were plenty of automakers just in the U.S. GM, Ford and Chrysler hadn’t quite consolidated their grip on the American market. In 1929, for example, Hudson-Essex held down third place among individual brands, and Willys wasn’t far behind. There were still plenty of companies making vehicles the U.S., not to mention Great Britain and France.
Today, there aren’t that many companies left throughout the world.
Yesterday I took my Accord in for an oil change. This Honda dealer used to have a pretty healthy turnover of inventory of new vehicles. Lately I’ve noticed that the same units seem to be sitting on the lot, week after week. Civics, Fits, Accords…not much appears to be moving.
westcott :
… I went and test drove a ZO6 yesterday and almost had to threaten to leave the store before they would hand over the keys.
Unfortunately retail commissioned sales weasels only know how to do what they know how to do.
Or as a colleague used to tell me every time I began ranting about the salespeople we had to deal with, “Remember, there’s a reason these guys sell cars for a living.”
It’s not right. It’s sad. But it is what it is. Car sales are just about the lowest rung on the sales profession ladder. (…just above door-to-door vacuuum cleaner salesmen?)
luscious: “Who was that guy who was recently busted for running a Ponzi scheme?”
Bernard Madoff. Pronounced as in “Bernie made off with the money.”
“… while GM sales are seen down 39 percent and Ford sales down 34 percent. Toyota Motor Corp, Honda Motor Co and Nissan Motor Co are all expected to report declines of about 40 percent.”
So why are the three transplants down more than GM or Ford? Was it that a year ago the domestics were already tanking but the transplants were doing well, or that F-150s and Silverado sales have picked up as the price of gas fell?
50merc: So why are the three transplants down more than GM or Ford? Was it that a year ago the domestics were already tanking but the transplants were doing well, or that F-150s and Silverado sales have picked up as the price of gas fell?
Initially the sales decline was driven by higher gas prices, so it hit the gas-guzzler segments first. The domestics are stronger in these segments.
Remember that the Honda Civic set a monthly sales record earlier this year?
Now, the recession is hitting EVERY segment of the new-vehicle market, and the transplants are bearing the brunt of this portion of the downturn.
Menno is on the same page I am regarding 2009 sales.
A few weeks ago, I thought that maybe the US would maybe crank out 10MM if the stars aligned properly.
The more the numbers come out, the more I think that I’m going with the 6MM or less number for ’09.
Yes luscious, credit as practiced in our economy is a (theoretically) carefully controlled house of cards. For every dollar a bank has on deposit, they can loan nine. Beyond the pile-o-bailout cash, the Fed has quietly loaned 2 Trillion on an ’emergency basis’. They won’t say to which institutions. Wanna take bets on how much of THAT gets paid back?
Hearken back to early in 2008, when TTAC asked the best and brightest the eternal question, “New or Used.”
We have a glut of used cars, so prices are low. Peoples expectations about what a vehicle is for (i.e., reliable transportation, not transpo-tainment and ego massagery) so people are just not going to be inclined to blithely walk into a dealer and sign up for 6 years of debt on the biggest, fastest bauble they can find….and banks are redlining and loaning only to superior credit scores. People will only buy a vehicle if forced to by failure or destruction of their current ride.
This adds up to new vehicle sales between 6-7 million, or a 50% reduction of a couple of years ago. Used car sales, on the other hand, will be not as bad, as many former new buyers will be looking for good deals on used iron. New car demand will not see 10 million units in the US until 2011, until the glut of used cars is soaked up.
I’ll be back next year to pick up my Cassandra award.