A recently-released Kelley Blue Book survey says that nine out of ten car-shopping Americans have at least one hunk of Detroit iron on their wish list. Even more tellingly, one third of shoppers polled would only buy a car built by Ford, Chevy or Chrysler. That’s a considerable preference for America as a nation-state of ostensible origin compared to Japan (12 percent) or Germany (five percent). “Seeing the domestic automakers’ recent struggle has ignited a heightened sense of patriotism among some American car shoppers, and the latest Kelley Blue Book Marketing Research indicates that people are pulling for the Big Three to survive and thrive,” said Jack R. Nerad, executive editorial director and executive market analyst for Kelley Blue Book. Which is one way to look at it…
Category: Sales
Despite the recent arrival of a Tahoe Hybrid (I’m on it), a Chevy Avalanche and whatever the Cadillac version of same is called in my daughters’ PC school parking lot, the death of the full-size SUV has been well-documented and publicized. Less well known: the mid-size SUV is even deaderer (sorry Andrew). Ward’s Dealer Business tells the tale: “SUV sales took a 39.3% plunge, going from 1.91 million units in 2007 to 1.16 million in 2008. Middle SUVs was the biggest segment loser, with sales sinking 45% in 2008. By comparison, midsize cross/utility vehicle sales were off 6.8%. ‘People are moving out of the midsize-SUV market completely and going to CUVs,’ says Matt Traylen, senior director for Automotive Lease Guide. ‘What people don’t want now is anything with ‘SUV’ in the name.'” Thank Got BMW called the honking great X5 and X6 “Sports Activity Vehicles.” And how’s this for a piercing glimpse into the obvious: “They don’t go up mountains or off-roading. They take their kids to school and go to the grocery store,” Matt says. “A lot of people are waking up and asking, ‘Why did I buy this vehicle?’” And then saying “Now what?”
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I’ve been watching the Hispanic-flavored “Operation Repo” series on truTV. All I can say is, man, obesity sucks. And if you need proof that carmakers have been selling too much car to too little brain, here it is. (Sweet G37 BTW.) For months, I’ve been telling my MSM contacts that repos are so bad that the collection agencies can’t keep up. In some cases, banks are not calling the repo man– to avoid the cost of recycling the cars and taking the hit to their bottom line. In other words, the headline figure above– representing a mere 12 percent rise of repos over 2007’s stat– could well be the tip of the iceberg. Tom Webb disagrees. Speaking with Automotive News [sub], the economist for auction giant Manheim says the worst is over. “[Repos] will certainly be up in first half of this year, and with the labor market deteriorating so substantially, it might be up quite a bit and might offset the decline I expect in the second half of the year. We won’t have a 12 percent increase, but I would expect something in terms of less than a 5 percent increase.” So “only” 1,753,500 repos for ’09, then. Even if that’s true, with new vehicles flooding the market, and used vehicles flooding the market, and repo vehicles flooding the market, prices are headed down. And if prices are headed down, residuals are in the crapper. And if everyone’s backwards on their existing loans, they’re not going to trade in for a new vehicle. You see where this is going? Nowhere.
The New York Times has put out a story saying what’s already on many industry observers’ minds: “The historic collapse of the new-car market dragged on in December, raising questions of whether the auto industry will ever again have sales levels that it took for granted just a few years ago.” The easy credit, hyper-consumerism era had established new car sales in the 16 million per year range. But then along came 2008’s dismal 13.2 million units… and the last half of the year was much worse than the first. Even the former “don’t worry, be happy, better days are just around the bend” cheerleaders have given up. “GM’s chief market analyst, Michael C. DiGiovanni, said the automaker was predicting industry sales of 10.5 million to 12 million vehicles for the year.” Long time industry pundit John Casesa says: “After an era of excess indulgence, we’re now entering a prolonged period of conservation. Trading in a car every three years is a luxury that the average American can no longer afford.” Against that background, one can only wonder what fantasies will be embedded in the new, new, newest turnaround plans GM and Chrysler will hand in to the U.S. Treasury Department a few short weeks from now. No matter what their term papers say, Casesa pegs it: “The internal problems of the Big Three are so great, there is no way they can survive without government help for several years.”
A TTAC commentator who wishes to remain anonymous raises a good point about Chrysler’s sales: “imagine Chrysler’s sales last month if ex-employees didn’t ‘buy’ their cars with Chrysler’s money. People who took the buyouts all got a free car as well. You know how people will ask… would you take a Chrysler car for free? (well, you still gotta pay the tax since Uncle Sam hates freebies). The answer is a resounding Yes! Because you can still flip the car for another brand and come out ahead after all the taxes. Anyway, approximately 5,000 of those Chrysler sales last month were paid for with Chrysler’s own money. Most were Wranglers, Grand Cherokees, and LX cars since those vehicles let you extract the most value out of your ‘free’ car.”
If a fish had brains and saw someone holding a shotgun, would it choose to swim in a barrel? Why then would Mike Accavitti, director-Dodge marketing, say this to Ward’s Dealer Business, which has all the sales data on everything. “Accavitti notes the ’09 Ram, which he describes as Chrysler’s ‘bread and butter,’ is grabbing more market share than its ’08 predecessor. Since the October sales launch to mark the ’09 model year, the Ram owned 4.1% of the light-duty truck market, an increase of 0.2 share points over the ’08 model year, according to Ward’s data.” Yes, well, the article was written before December’s sales results; where Ram sales tanked by 48 percent vs. last year, down 31 percent for the year. I wonder how much that market they own now. In any case, it appears Dodge blew the launch.
Finishing 2008 with positive sales growth was basically unheard of this year in the US car market. Titans like Toyota, hot brands like Audi, nobody is safe from the sales downturn that is crunching the biz. Except Subaru. The all-AWD boys managed a narrow 0.3 percent sales bump for 2008, as strong Forester sales (up 62.8 percent in December, 36.4 percent on the year) helped limit December bloodletting to a 7.7 percent downturn. So even though Subaru literally sold only 491 more cars in 2008 than it did in 2007, you can’t help but call it a win. Unsurprisingly, Tribeca and Outback are the big losers, dropping 52.1 and 30.3 percent in December and 34.6 and 22.8 percent on the year. And Subaru’s short-term positioning continues to look good. Though the summer gas shock had consumers scurrying for Fits and Priora, leveling prices and a harsh winter make Subaru’s products look like a smart step for the downsizing SUV-as-luxury crowd. Subaru’s out of the WRC championship, and the Toyobaru coupe has been canceled (it should have been the Tribeca!), but in the US market Subaru looks as good as can be expected.
The post-apocalyptic analysis of December’s sales results continues, as pundits and producers attempt to make sense of the crater that’s replaced the U.S. new car market. Obviously, the situation will have the greatest impact on the Chrysler and GM. The domestic automakers have just finished their first suckle on Uncle Sugar’s taxpayer teat, with GM auguring-in for its second go mid-month. And both companies face a congressional grilling when they return for more money in March. So, what to do? What to do? For answers to that question, for the manufacturers’ spin, we turn to their unofficial mouthpiece, The Detroit News. “Auto sales skid: Recovery rests on stimulus” starts with good news! “After barely making it through the worst year for auto sales since 1992, Detroit’s Big Three expect consumer demand to remain very weak in the first half of 2009 but begin to recover in the second half.” I’d like to point out that a general “sales” recovery does not necessarily mean Chrysler or GM’s recovery. But that would kind of ruin the flow, if you know what I mean. To wit…
Crap. You know, I went to Coachmen Industries website to check for a list of RVs. The RV site didn’t some up. Just kept on a spinning, then timed out. And I saw that the main site was all about pre-fab housing. But I thought, oh well, the RV site’s down. But as bluecon points out in a comment below, Coachmen Industries is out of the RV business as of Boxing Day. Doh! But at least TTAC’s Best and Brightest spotted my lack of reportorial due diligence and properly revealed willingness to take Edmunds and Autoblog’s posts at face value. My bad. Lesson learned. And according to previously stated policy, I will not take this post down. Well, not the headline and the comments. The text is toast, ’cause there are limits to my prostration. And props to Warren, ’cause, as Kurt pointed out, this kind of housing is sure to find favor in the coming months and years ahead. Never a truer word was spoken in jest. Oh, and Buffett already owns an RV maker– that bought Coachmen’s assets.
Automotive News [sub]: “The magazine normally recommends cars in its April issue. But it singled out eight Detroit 3 vehicles early because consumers may be concerned about reliability while General Motors and Chrysler LLC seek federal assistance, said David Champion, the magazine’s chief car tester. ‘We’re only about halfway through our testing, so it’s not a complete list,’ he said. ‘But because of the public interest, we thought it would be useful.”” Huh? Since when is it Consumer Reports’ job to allay consumer fears about the reliability of the products produced by a small group of automakers, especially in response to an industry-wide event? In other words, why the special treatment? Even if it’s all about catering to a public need– remembering that Consumer Reports is a non-profit organization and there is no statistical data to support this position– CR’s special issue increases the psychological polarization between domestic and import-branded vehicles. And that’s not a good thing– for the domestics. If nothing else, the D2.8’s abject inability to identify the difference between quality relative to each other and quality compared to the wider car market has contributed to their failure. Anyway, the “winners” in the gallery below and/or after the jump.
“With outstanding resale value and a strong lineup, Acura will be in an excellent position when the automobile market begins its recovery.” Which can’t come soon enough for Honda’s up market (mid-market?) brand, which saw sales sink by 39.3 percent. The situation is so dire– or the PR department so clever– that the company isn’t providing the usual chart showing December ’07 vs. December ’08 sales broken down by vehicle, and stats for year-to-date comparisons. All they’ll tell us is the headline number and “in its second full month of sales, the all-new 2009 TL performance luxury sedan remained Acura’s sales leader for November with 3,160 vehicles sold… The all-new 2009 TSX sports sedan recorded sales of 1,712 for the month, with year-to-date sales reaching 29,694 units. The MDX luxury SUV was Acura’s best-selling light truck, with sales of 2,101, while the RDX crossover SUV tallied 681 units.”
Nissan’s December sales weren’t out of line compared with the rest of the Big 6, down 30.7 percent in the last month of the year. Unlike some others today, the sales release didn’t have much nausea-inducing spin. Again the couple of bright spots were the CUVs Rogue and Murano, up 10 and 54 percent respectively. The Quest minivan was again the mass-production loser, down 74.7 percent and 491 barely hustled. Other Nissan branded cars and trucks were well into negative territory, regardless of size or displacement. 2008 totals down 10.9 percent and just under 1 million sold., or less than half of Toyota. Infiniti division took a (par) 34.6 percent hit with nary a bright spot and closed out the year down 11.1 percent. At 112K vehicles, totals were roughly half that of Lexus, Mercedes, and BMW. Godzilla body count: 149 this month, 1,730 (potential fried transmissions) for the year. (We kid. We hope.)
In fact, sales for the Toyota brand itself (as distinct from Scion and Lexus) fell by 37.5 percent. Oh yeah? Well, Lexus’ December sales sank by a whopping 41.8 percent. There was only one– count it ONE vehicle– that experienced a sales increase. The Lexus LX, the gigantic badge-engineered Toyota Land Cruiser, increased sales from 132 to 508 monthly sales (something to do with gray market exports to the Gulf methinks). Everything else dropped like a proverbial stone thrown in a deep dark well, from the Corolla (-19.4 percent) to the Camry (-22.6 percent) to the Highlander (-47.1 percent) to the aforementioned Land Cruiser (-65 percent). The Scion xB redo is looking like a HUGE mistake, with sales off by 52.6 percent for the month, which is only slightly less bad than December sales of the Texas-built Tundra (-52.2 percent). One wonders what these numbers would look like without the Saved By Zero marketing campaign. Folks, in case you didn’t know it, it’s Hell out there.
Earlier today, we reported that rental fleet sales had fallen by 500k units in the last 12 months. Clever members of our Best and Brightest connected the dots, and wondered where that would leave the fleet queen herself, the New Chrysler Corporation. “Total sales were significantly affected by the industry’s largest reductions in fleet sales,” the official press release almost boasts. “63 percent for December and 31 percent for the year.” Yes, well, the retail end of the business wasn’t that much better; tanking by a full 53 percent. Needless to say Jim Press quickly sacrificed the last remaining shreds of his credibility to toe the company line and collect the company paycheck. ““Last year Chrysler and all of our stakeholders persevered through extraordinarily difficult economic conditions, made the necessary adjustments and always kept our focus on serving our customers,” said Jim Press, President and Vice Chairman, Chrysler LLC. “As a result, our Company and our dealer network start this year stronger and better positioned to succeed in today’s marketplace.” Let’s have a little look at where that might be…
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