Last things first. The Detroit Free Press article on the prospects [eventually] greeting Ford's delayed next generation F-150 ends with a sobering analysis. It arrives courtesy of CNW Marketing Research in Bandon, Ore. "The appearance buyer is totally out of the market," Art Spinella asserts. "He's gone." According to Spinella's template, that leaves farmers and ranchers; towers or people who pull recreational vehicles or boats and fleet customers. Uh-oh, what happened to building contractors? They may not be on Art's radar– given the housing slump, why would they be?– but Ford's still got them in its sights. "Instead of launching the all-new 2009 F-150 with luxurious four-door models, Ford instead will spotlight the two-door models that always have been more popular among contractors, farmers and fleet customers." With full-size pickup sales off 21.1 percent so far this year, Ford F-150 sales down 40.5 percent in June, gas prices staying high and the fact that F-Series accounts for one-fourth of FoMoCo's total sales, the new F-150 is fighting some big ass headwinds. But hey, at least it will do so with a six-speed gearbox and 1.5mpg better fuel economy than its predecessor.
Category: Sales
Truck-heavy Detroit is in a world of hurt. Buyers have abandoned their former cash cow; light truck sales dropped 28.4 percent last month. July's numbers will be worse. August's worserer. And speaking of what's-blacker-than-black, even the remaining formerly bounteous bovines are looking distinctly Mary-Kate and Ashley. The Detroit Free Press takes a break from their barbecue to bring news that the genre's profits have dropped by half. Or more. "Many of the nation's automakers [read: all of the nation's automakers] have been jacking up the deals into territories not seen since the summer 'employee pricing' craze of 2005. Last month, automakers offered an average of $6,580 off pickups and $5,850 off midsize SUVs, according to Autodata Corp. of Woodcliff Lake, N.J., a private firm that estimates incentive spending. Automakers do not report that number publicly." Why would they? Six-plus-grand is the average. Of course, there will be a reckoning. Brian Johnson, an analyst with Lehman Brothers: "We believe that GM and the industry will see a large payback in the coming months." Ya think?
The Washington Post's Annys Shin [via The News Tribune] wins the prize for the best parsing of the initials SUV: Simply Unwanted Vehicles. True dat. Full-sized SUV prices have dropped 24 percent since last year; used Chevy Suburbans have devalued as much as $8k in the past six months. With that in mind, SmartMoney has five ways to help panic-stricken owners unload their automotive albatross. First, "be your own salesperson." Since dealerships don't want SUVs and can't sell what they have, seems sensible enough. Next, "price it right." Just make sure you use chalk or pencil; values are still dropping like a stone thrown in a deep dark well. Then "advertise online." Don't worry about the fact that AutoTrader.com's SUV ads have jumped 18 percent. You should also "provide plenty of details." If you're selling something no one wants, drowning them in minutiae just might work. Finally, "build credibility" with prospective buyers by providing maintenance records (provided you had the foresight to keep them) and a Carfax report (provided you aren't selling a rebuilt wreck). Whatever you do, maintain a positive attitude. Make the [theoretical] buyer believe he really wants to assume your liability– in the same way a cheerleader tries to get the crowd on their feet when their team is down by 45 points in the fourth quarter. Hence the picture.
"We continue to question whether GM will be able to sustain eight different brands and over 13,000 franchises with less than 20 percent market share." TTAC? Nope. Deutsche Bank analyst Rod Lache, as quoted by the Detroit News. GM's stock fell below $10 a share yesterday, and the prognosis isn't good for the company whose stock has fallen by more than 70 percent in the past year. Even Merrill Lynch analyst John Murphy, described by his peers as "last guy defending the [GM] bunker," said he expected GM's stock to fall to $7 and forecast "significant losses" for GM this year and next. When even the cheerleaders start predicting a losing season, the team doesn't stand much of a chance. It looks like GM could use a new coaching staff, and fast.
At the recent Toyota Environmental Forum, ToMoCo’s Executive Vice President outlined the company’s five-point plan for a “sustainable mobility society.” Green Car Congress charts the ch-ch-changes. 1. Further development of gasoline- and diesel-fueled combustion engines; 2. Hybrids and plug-in hybrids; 3. Alternative fuels, including synthetics and biofuels; 4. Electric vehicles; and 5. Hydrogen fuel cell vehicles. Masatami Takimoto revealed that gasoline and diesel will remain the corporate mainstay. To that end, Toyota will reduce vehicle size and weight and introduce a new family of engines with start-stop, direct injection, forced induction, HCCI and variable compression. The automaker will hybridize all its vehicles lines by 2020, increasing NiMH batteries density. Li-ions are heading for city electrics and plug-in hybrids; the plug-in Li-on Prius hits the streets in 2010. And here’s the kicker: Toyota’s working to leap-frog Li-ion technology. Takimoto says a practical and cost-efficient EV demands a technological breakthrough. Maybe GM’s Volt isn’t so much a “Hail Mary” pass as an intentional out-of-bounds throw before it gets sacked by the “Sakichi” battery (named after Toyota’s founder).
Forbes, that Number One purveyor of "Top 10" lists, has devised a list of the ten hardest-to-get cars. They've based their selections on dealer inventory levels and retail turn rates (how long a model sits on the lot before it's sold). While some of the selections are obvious (anyone try to buy a Prius lately?), who would expect the 14mpg Lexus LX to be in short supply? The other two anomalies (considering gas mileage and purchase price) are the Audi A5 and the Mercedes-Benz C-Class, both of which are selling faster than they can build them. Here's the entire list and supply level of each model:
Toyota Prius – 7-day supply
Lexus LX Series – 8-day supply
MINI Cooper – 8-day supply
Audi A5 – 8-day supply
Toyota Yaris – 13-day supply
Scion xD – 19-day supply
Honda Fit – 20-day supply
Honda Civic – 21-day supply
Toyota Corolla – 23-day supply
Mercedes-Benz C-Class – 29-day supply
While GM's North American operation has been hemorrhaging money like a hemophiliac having heart surgery, its overseas operations have managed to turn enough profit to keep them from the bankruptcy court. Chinese sales are still growing, but the boom may go bust. In 2007, sales increased 19 percent. So far this year, sales are up 14 percent. Although China's still the world's fastest-growing auto market, raw material costs are soaring, and The People's Republic is easing off fuel price subsidies. Through their "joint venture" (i.e. shotgun wedding) with Shanghai Automotive Industry Corporation (SAIC), GM is the Republic's largest carmaker. But they're beginning to face stiff[er] competition from Toyota and Volkswagen. Joseph Lau, vice president for GM China, told Bloomberg "Shanghai GM has been facing difficulties by relying on existing models to compete with rivals that have added new ones." Sound familiar? Lau added that GM/SAIC has only one new model in the pipeline for this year: a locally-made hybrid version of the Buick LaCrosse. They're adding one new model next year, a Buick sedan to compete with the rapidly-growing Camry and Corolla. Does anyone know the Chinese translation for "Those who do not learn from history are doomed to repeat it"?
Jalopnik poses a pertinent question– at least for semantically-minded pistonheads. How can GM "extend" a 72-hour sale into a 14-day event? Andrew Stoy takes us down the spinmeisters' rabbit hole. "But how do 72 sort-of hours in seven days end up being 72 no-we-really- mean-it-this-time hours spanning a whopping 14 days (Tuesday the 24 through Monday the 7th)? By using the eight-hour workday! First, subtract the weekends; that's minus four days for a total of ten. But ten times eight is 80, you cry! A-ha. Don't forget the Fourth of July, friends. Subtract eight more hours, and you end up with a perfect 72-hour-long 72-Hour Sale. Which is exactly how GM intended it from the start, we're sure." As for the financial implications, it's important to remember that the fire sale prices came at the expense of GM's margins. And while the moved metal bolstered GM's sagging sales– from unthinkable to just plain horrible– there will be a reckoning.Quoted by U.S. News & World Report, Credit Suisse analyst Chris Ceraso predicts the 72-hour sale will generate "some pretty severe payback over the coming month or two."
You'd figure that Mercedes would promote their new California-compliant BlueTec diesel-powered vehicles based on their fuel efficiency. Times two, considering that opting for the oil-burning engine requires a $1k premium. And the fact that diesel is roughly 25 percent more expensive than gas. We knew there was an "issue" when WardsAuto's strapline revealed that "The ability of the diesel cross/utility vehicles to achieve a cruising range of up to 600 miles is a significant selling point, the auto maker says." To which we say uh-oh. Still, you'd think that Ward's would crunch the numbers. Nope. "Cleaning the exhaust doesn’t bite into fuel economy because the diesel generates 20%-33% better mileage than a comparable gasoline engine. The 6-cyl. Bluetec provides 4-cyl. fuel economy and V-8 power and torque, the auto maker claims." In the interests of veracity and transparency, Frank did the math for you below. Oh, and the BlueTec's NOx-scrubbing urea supply lasts just 10k miles. If the tank gets too low, you get 20 starts to refill. After that, the car won’t start. Where do I sign?
[First mpg = EPA combined mileage; second mpg = BT mpg rounded to the nearest whole number]
G-class – GL450 4matic (4.6L V8), 15mpg > 18 – 20mpg; GL550 4matic (5.5L V8), 14mpg > 17 – 19mpg M-Class – ML350 4matic (3.5L V6), 17mpg > 20 – 23mpg; ML550 4matic (5.5L V8), 15mpg > 18 – 20mpg R-Class – R350 4matic (3.5L V6), 16mpg > 19 – 21mpg
Nissan's numbers are finally available, and they're not looking hot, either. Unadjusted ('cause that's how we roll) June sales are down 17.7 percent overall, with trucks taking a 37.9 percent hit. Bright spots included the new Rogue CUV and a slight bump in Versa sales. Most cars held their own, with single digit percentage sales drops. Exceptions: the outgoing Maxima (uh, okay) and the incoming Murano (uh-oh, down 24 percent). Truck and minivan sales drops were impressive and as bad or worse than the other top six. Frontier led the way (-58.1 percent), followed by Quest (-62.3 percent), Armada (-63.4 percent), Xterra (-68.3 percent), Titan (-71.4 percent), and Pathfinder (-71.7 percent trailing. [Pause for picking your jaw up off the floor.] As bad as these numbers appear, the horrifying percentages were offset by Nissan's relatively small sales volumes; their truck line sold just 19K units last month. Still, Nissan has some production shifting to do, just like everyone else.
Autoblog: "You're going to be reading in the mainstream press about how horrible sales were in the U.S. during June, 2008. Yes, they were bad for many automakers, but consider that there were only 24 selling days last month versus 27 days in June, 2008. This makes comparing raw sales numbers misleading, since there were three fewer days to sell. Thus, as always, all the percentages below represent the change in Daily Sales Rate, i.e. the average number of vehicles sold per day, not the change in raw number of vehicles sold." TTAC joins Automotive News in rejecting this metric. We go by cars sold per month. Period. That said, TTAC got caught-out when Automotive News started with adjusted numbers, then revised to non-adjusted numbers. But no matter how you crunch these stats, they ARE horrible. "Not That Bad Edition"? The idea that any credible news organization would say otherwise is almost as astounding as the chaos afflicting the U.S. new vehicle market. How about this: there are industry players in Detroit who ascribe to Autoblog's Pollyanna philosophy. And while you're thinking about that (or something), Justin and I perform our usual reality check.
Spaghettification as named by Stephen Hawking is the extreme stretching of objects into its components by a extreme gravity field, to the point of becoming but a thin strand of elementary particles. As forecast by Chrysler plant cutback and closing yesterday, the maker most dependent on minivan and truck sales is definitely getting the stretch this June, with sales down 36 percent (unadjusted). Surprisingly, car sales dropped even further, down a whopping 49 percent. Grand Caravan sales are a bit of bright spot: up 52 percent. But GC sales are still down 27 percent year-to-date, warranting the closure of the St. Louis plant.. Not surprisingly, the outgoing Ram is down 48 percent, The Caliber and Compass took hits of 44 percent and 39 percent respectively, the complete opposite of just about every other manufacturer's small car lineup. The press release contained paragraphs of spin, announcing that the $2.99/gallon fuel promotion will continue through the end of the month. Frankly, there's no escaping this gravitational sinkhole.
Click here for Chrysler's Press Release, which uses sales adjusted numbers.
GM is reporting sales drops for June; just how bad it is depends on what numbers you use. Their press release talks about deliveries, retail sales, sales, adjusted numbers, and unadjusted numbers. Like Automotive News , we prefer using numbers that aren't adjusted for "sales days," so GM's sales for June were down 18.5 percent from the previous year. For the first half of the year, they were down 16.5 percent from 2007. If you can believe it, car sales were down e ver more than light trucks (21.1 percent vs. 16 percent, unadjusted). Individual car models had increases, some large, that were more than balanced out by other car models having decreases.So, what about the Hail Mary 72-Hour-No-Make-That-10-Day 0 Percent Financing sale? "The 72 Hour Sale at the end of June was targeted at the 2008 vehicles left in inventory. Combined full-size pickup and utility inventory is down about 124,000 vehicles compared with June a year ago. The sale helped rebalance inventory to a stronger car mix. There were about 238,000 cars and 550,000 trucks in inventory at the end of June." Given the rate trucks are selling, a two-to-one ratio of trucks to cars still doesn't sound that promising. July's sales numbers will tell that story.
As expected, Honda dodged the gravitational pull of Black Hole Tuesday. Automotive News [sub] reports Honda's sales rose 1.1 percent [unadjusted] in June, up 4.1% year-to-date. Needless to say (but what the Hell), every single Honda and Acura SUV, truck and van suffered a sales shock. Yup, even the big H couldn't scratch out a sales improvement; sales of the new big-nosed Pilot were down 21 percent for the month. Once again, the Honda Civic and [Edmunds' AutoObserver's "future flop"] Accord narrowly beat Ford's F-series for the "most likely to get bought" sobriquet. Both Honda cars racked-up almost 40k sales apiece. Fit sales are up 100 percent– despite the model being on its last legs. It's a great time to be a maker of four-cylinder cars. It's an even better time not to be reliant on trucks and SUVs to make your nut.
To paraphrase John F. Kennedy (who probably stole the expression from someone else), a falling tide lowers all boats. Or, if you prefer, it looks like Toyota got keelhauled along with the rest of 'em this month. Automotive News [sub] also does nautical metaphorication, reporting that "Toyota Motor Corp. ran aground in June, with U.S. sales down 21.4 percent (unadjusted), the biggest drop of the year for the world's No. 2 automaker. For the first half, Toyota said it sold 1,240,086 vehicles, down 6.8 percent from the first half of 2007." ToMoCo doesn't break out their Scion sub-brand's sales, but Lexus is proving to be a luxury canary in a gold mine- or if we're unmixing metaphors, a bit of a boat anchor. Lexus' Junes sales slumped 21.1 percent vs. June '07. Truck sales? We're talking post-iceberg Titanic; down 31.1 percent. What's worse, Toyota can't build Prius-shaped lifeboats fast enough. "Sales of the Prius hybrid were down 25 percent during the month as Toyota struggled with supply problems. Dealers are reporting a two-month wait for the fuel efficient hatchback." Clearly, the U.S. market is undergoing a sea change. Toyota has the products it needs to change course, but it's hard to sell anything when people ain't buyin'.
UPDATE: Toyota just sent out a revised press release with June's sales breakout. The numbers in the press release are adjusted for selling days. The numbers used both by Automotive News and TTAC are unadjusted.
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