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?

Credit is at the heart of the current auto crisis, a fact agreed to by all sides of the debate. But while the pro-bailout crowd wails about needing a 700 FICO score to get a car loan, the fact of the matter is that cheap credit allowed Detroit to create this problem in the first place. Mother Jones correctly points out that Detroit has been redlining the American auto market for years, by finding the easiest profits possible. And no, they’re not talking about SUVs. The thesis is that with car pricing easily available online, dealerships relied on financing offers to lure consumers into the store. Loans were loaded with extras, interest rates would be bumped for kickbacks, and upside-down trade-ins were rolled into the new loan which often stretched to six or seven year terms. These tactics, which MJ calls “endemic,” have left a US market where 85 percent of Americans with a car loan have negative equity. On average upside-down Americans owe $4,400 more than their car is worth. And all the while congress has played right along, from including a provision in the 2005 bankruptcy “reform” which forces filers to repay the entirety of a car loan, even if they owed substantially more than their car was worth, to engaging in fraud themselves. Now, as Rosemary Shahan of Consumers for Auto Reliability and Safety puts it “no matter how much money Congress throws at the automakers, it’s car buyers who will rescue them or not.” With 85 percent of American car owners looking at an average of $4,400 negative equity on their vehicles, Mother Jones is absolutely correct in assuming that the $17.4b bailout band-aid won’t bring back the business Detroit needs. Which proves that even when their main product was financing, the Detroit Three still just couldn’t get it right.

Conservative talk show host Bill “I swear the nuns didn’t beat me” O’Reilly likes to rail on (and on and on) about America’s cultural degradation. In fact, it’s one of our country’s greatest strengths. Rappers who started by singing (well, shouting) the praises of capping cops end-up in Bentley-and-bling filled videos that make unbridled consumerism seem like the ultimate revenge against The Man. Hell, there ain’t nothin‘ we can’t assimilate! For profit, obviously. And the people who profit most are always the distributors. I’m not sure what Karl Marx had to say on the subject– I’ve got “How To Make a Killing off of Karl Marx” on my night table– but he who controls the distribution owns the gold. So along comes Zipcar. Nice idea: rent a car by the hour. Here’s your card. Pick up a car, swipe ‘n go. After eight long years, they get a bit of traction: 5,500 cars in 13 cities. Rad dude! I guess we’re showing those big rental companies how it should be done! Problem: Hertz.

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An eye-watering death scent surrounds Chrysler going into this week. With a last-ditch bailout likely to focus on GM, and even the hometown cheerleaders kicking around the idea of throwing ChryCo in the volcano, Auburn Hills has all but given up on trying to staunch the flow of bad news. Of all the Chrysler-related bad news, nothing jumps out like the persistent rumors of Pentastar dealers offering two-for-one deals on Auburn Hills Iron. We first heard of this happening in the UK with overstock Avengers, but the phenomenon is spreading to the states. Automotive News [sub] reports that If you buy a 2008 Dakota for $27,590 at Bettenhausen Dodge in Tinley Park, Ill, Mr Bettenhausen will throw in a lightly-used 08 PT Cruiser for your trouble. “The automotive business is no longer about how much money you can make,” says the Bettenhausen. “It’s about minimizing losses. We need to get ourselves to a breakeven point in this challenging market.” Especially when Chrysler’s right there to twist the knife. Automotive News [sub] reveals that the Chrysler Sales Bank is back to plague dealers with yet more inventory they can’t sell and don’t want.

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Nissan is wasting no time wasting the Quest minivan, and platform sibs Armada and QX56. All three vehicles are a drug in the marketplace– and it ain’t cocaine. Motor Trend almost connects the dots, “Nissan has partnered with Chrysler to shift the full-size Nissan Titan truck to the Dodge Ram platform, and it appears now that more changes are underway for Nissan’s large vehicles.” Hmmm. Do you think that any new SUV for the U.S. market might be based on that platform, rather than what they done built down in Canton, Mississippi? You know, kinda like the Sequioa sits on the new Tundra? Could be. But I reckon MT’s right on the money (or lack thereof) when they suggest that the Quest and QX are being KOed completely. And here’s why… “Nissan and Infiniti sold a combined 72,450 of all those three models in 2007. The Armada posted a whopping 70.5% drop in November and is down 49.1% so far this year. QX56 sales fared slightly better, dropping only 53.3% in November and 33.6% this year. The Quest was by far the worse off of the three with sales dropping a catastrophic 81.3% in November and 33.3% this year.” Sayonara. Over and out.

…and Honda tops the list for the first time. Nearly 65 percent of new Honda purchases replace an older Honda, edging Toyota’s retention rate by 1.5 percent. Lexus comes in third with 60.4 percent retention, followed by Mercedes and BMW. Ford scored the highest of all domestic brands, capturing 6th place with 52.5 percent retention and barely edging Chevrolet which boasts an even 52 percent retention. Cadillac was the only other domestic brand coming in above the industry average of 48 percent. Jaguar scored the lowest in the survey, with only 26.2 percent retention. Pontiac was second to last with 27.2 percent, with only Mitsubishi and MINI joining it under 30 percent. Check out the full results in PDF form at JD Power’s site.

Autoremarketing reports that not only were November’s results the 11th straight monthly drop this year, they were also the steepest thus far. In even better news ( at least for the makers of your favorite brand of anti-depressants), the Seasonally Adjusted Annual Rate (SAAR) of sales shows that things are even worse than they initially appear. “When December’s numbers are extrapolated, fourth-quarter SAAR is expected to be 10.4 million units,” intones Autoremarketing, “which would be 35.8 percent weaker than the fourth quarter of 2007 and the heaviest drop-off in 4Q SAAR since 1967.” And this, despite widespread attempts by OEMs to redline their sales with cash on the hood. Average cash rebates in November were $3,392, up 71 percent from a year ago and at their highest level since 2003. Incidentally (or not) 2003 was also the last time we saw turn rates as slow as this month. Vehicles sat an avaerage of 83 days on the lot in November, up from 73 days in October and 58 days in November of last year. Market stratification continues apace, as “compact basic” and “compact conventional” models sat only 35 and 44 days respectively, while anything with the name “utility” in its category sat for at least 100 days on average. Finally, “negative equity trades (as a percent of all trades) dropped to 25.48 percent in November, the lowest level for this metric since the start of 2003 as owners with upside-down vehicles either could not obtain a loan or stayed out of the market altogether.” Bail that.

Autocar reports the TTAC-predicted cratering of new Ferrari sales. “Global sales at the Italian supercar maker have dived from almost 600 a month to just 92 cars in November and Ferrari is now negotiating with Italy’s trade unions to trim unwanted road-car production staff.” And it appears (ya think?) inventories are building-up. “Ferrari will also shut its Maranello production plant for an unprecedented 20 days over Christmas, which sources insist will be to prevent vehicle stockpiles reaching unmanageable levels.” Uh-oh? No! “Ferrari has denied that the company has been adversely affected by the credit crunch. The company said that the extended break was merely Ferrari being generous to its employees.” It gets worse…

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A contact who works for one of Chrysler’s tier 1 suppliers shared an interesting story…  “Production at the Newark Assembly Plant (Durango, Aspen) has been ramping down as the Dec. 31 plant closing approaches.  As usually occurs just before a model-year changeover, suppliers have been receiving “shortage” orders for their components as Chrysler tries to build out existing stock with a minimum of excess parts. But a recent and unexpected order for 2000 parts raised a few eyebrows.  It seems that the Iraqi government has placed an order for 2000 Dodge Durangos to be delivered early next year. The Newark plant is more than capable of building them in time, but some suppliers with longer delivery lead times or full production schedules have been asked to pull off nothing short of a miracle to fill their orders. For certain suppliers, not even overtime will be sufficient to meet their deadline, leading to some logistical nightmare scenarios.

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If you think it’s a buyer’s market for new cars, oh man are you right. But you ain’t seen nothin’ yet. Literally. “At the Long Beach port near Los Angeles,” Reuters reports. “Toyota Motor Corp vehicles including Prius hybrids, FJ Cruiser sport utility vehicles and Lexus IS 250 luxury sedans are being stored on a vast construction site that will one day be a new container terminal. The site became a gigantic parking lot when Toyota and Daimler AG’s Mercedes-Benz asked the port for space to store thousands of vehicles that dealerships have not been able to take on due to sluggish sales.” Imagine this. “The port has not counted how many additional cars were being stored, but Wong said Toyota has leased an additional 23 acres of space while Mercedes-Benz has leased about 20 more acres.” So, if the ports are choking on new cars, where are Motown’s unsold machines? Everywhere, our spies tell us. Everywhere. Import or domestic, their products don’t have an idefinite shelf life. There’s only so long the manufacturers can afford to keep these new cars off the market, propping-up new car prices. Bottom line: as predicted here, new car prices are headed for one Hell of a crash. And soon.

Dubai gas prices might reach parity with Oklahoma City prices in the near future, as the Emirates of Dubai and Abu Dhabi contemplate raising their standard prices from 6.2dhs per Imperial Gallon (or $1.38 per US Gallon). The rising gas prices only hint at the start of problems from plummeting oil prices in the UAE as ADNOC (Abu Dhabi National Oil Company) and ENOC (Emirates National Oil Company) have started to prohibit cars bearing plates from other Emirates from using their filling stations, as they are the cheapest areas in the UAE. Residents of Sharjah have created the greatest outcry thus far as they complain they are all citizens of the UAE, not one particular emirate, and should have equal filling opportunities no matter where they are. Other victims of the oil crash: the massive building sprees Dubai and Abu Dhabi went on trying to create a tourist destination paradise from a gravel parking lot covered in sand dunes.

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US auto sales in the month of November are down to a 26-year-low, with losses ranging between 30-47 percent for the top six manufacturers. I went to visit one of my favorite Mercedes dealers this weekend to see how my friends were faring (truth be told, I was bottom fishing) and I heard one tale of woe after another. One salesman, who I have known for more than ten years explained that he had sold one single car for the month of November. His wife had worked for one of the banks that cratered a few months earlier, so they were trying to get by on his meager commission, without much success. Since they cannot afford their mortgage payment anymore and they are underwater on the value of their home, my friend is staring down the barrel of the bankruptcy option. Even if you slept through much of Econ 101 in college, you cannot fail to recall that when supply greatly outstrips demand that lower pricing is the only solution and I am not talking temporary discounts and special financing deals. Everything you own is worth less today than yesterday- your home, your 401K and your only consolation is that the gas costs less, retailers are cutting their throats to get your business and soon even food will cost less.

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Like everyone else, Nissan reported dismal sales for November, with total US sales down 42.2% and off 9.5% YTD. Without good news to report, Nissan’s press release consisted of a list of GT-R awards and future vehicle fluff (Cube, $10K Versa 1.6, 370Z, Infiniti G convertible). The Nissan division took a 44.4 percent hit with just about all cars and trucks taking double digit percentage hits. The little Versa was down 18.4%, Altima down 45.3%. The Murano and Rogue were faint bright spots, down 2.6% and up 4.7%, respectively. Other trucks took a pounding: Frontier down 70.7%, Titan down 79.6%, Xterra down 71.6%, Pathfinder down 70.6%, Armada down 70.5%, with the Quest minivan lagging at a whopping 81.3% drop and a mere 342 vans leaving the dealer lots. The Infiniti division took a 28.0% hit with all products in negative territory. Godzilla Watch: GT-R sales were steady at 208 for the month, 1,581 for the year.