Auto Sales Tank
The recent data has been nothing short of astonishing. Auto sales, which were weak over the past 11 months, simply went into freefall in September:
• Ford Motor posted a 34% drop. Their truck and van sales fell 39%, SUV sales plummeted 57% and F-series truck sales dropped 42%.
• Honda reported a 24% decline in sales;
• Toyota U.S. Sept. sales drop 32.3%, light truck sales dropped 38%
• Lexus sales -- Toyota's luxury nameplate -- fell 37.7%;
• Chrysler U.S. September sales fall 33%
• Volvo sales slumped 51.8%;• Porsche tumbled 45%;
• General Motors sales down 15.6% (better than the expectations of -26%)
• Nissan Sales down 37%
• BMW U.S. sales dropped 25.8%
• Mercedes-Benz reported sales off -16.4%
• Volkswagen sales for September fell 9.4%;
• Hyundai Motor's U.S. sales fell 25%;
• Kia U.S. sales slide 27.8%
• Audi U.S. sales are down 5.4% (but they are a low volume marquee, selling 7, 584 units, vs small Korean mfr KIA, which sold 17,383)
This means the bog winners were VW, (-9.4%), GM, whose sales were better than expected (-15.6%), and Mercedes Benz (-16.4%).
I cannot recall ever seeing Toyota sales down 32% . . . According to the Detroit Free Press, the seasonally adjusted annual SAAR for the past decade has ranged between 14 million and 17 million vehicles. Since December, the SAAR has been in a free-fall, and September now looks like its going to hit 13 million annualized sales. Edmonds.com noted that the last time fewer than 1 million new vehicles were sold in a month was February 1993.
In a related Reuters story, a new study says that nearly 1 in 5 car dealerships could fail:
"As many as 3,800 U.S. car dealerships could fail this fall and into 2009 -- nearly one in five -- because of weak sales, increased operational costs and the credit crunch, according to a forecast released on Wednesday. "An increasing number of dealers are simply closing their doors because sales have plummeted, credit has dried up, the overall retail environment is increasingly challenging and potential investors are sitting on the sidelines," said Paul Melville, a partner with Grant Thornton LLP, which issued the forecast."
Gosh, thank goodness we are not in a recession! Imagine how bad auto sales would be then!
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Auto Sales
click for ginormous chart
chart via Econompic
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Related:
U.S. Economy: Manufacturing Contracts Most Since 2001 Recession
http://www.bloomberg.com/apps/news?pid=20601087&sid=aY_yX5_X8Ulg&
Auto Sales Start to Look Like Home Sales
http://blogs.wsj.com/economics/2008/10/01/auto-sales-start-to-look-like-home-sales/
Wednesday, October 01, 2008 | 01:55 PM | Permalink
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it's patently illegal for car sales to go down in the US of A. there must be a $25 B bailout! same goes w RIMM's Blackberries. a Blackberry for every man, woman, child, critter in America! paid for by the next bailout
Posted by: scorpio | Oct 1, 2008 2:06:08 PM
A decade of declining wages and rising debt had to end somewhere. Car dealerships, strip malls, office parks -- all going down. Let's get the irrelevant financial bailout overwith so we can deal with the horror of the real economy.
Posted by: rww | Oct 1, 2008 2:08:35 PM
Under Strain, Cities Are Cutting Back Projects
Cities and states having trouble selling muni bonds.. Can't be because lenders are wary of falling tax revenues?
"New York City decided to brave the markets on Monday and ended up having the whole place to itself. It managed to issue $300 million of bonds for public schools, the only issue of the day. The New York Transitional Finance Authority will pay 5.75 percent on those 30-year bonds, the equivalent of a 10.5 percent interest rate to New York City residents, who will not have to pay city, state and federal tax on the income."
Posted by: Dr. Kenneth Noisewater | Oct 1, 2008 2:08:57 PM
A 34% drop? I wonder what could be the reason for that? After all, Rick Wagoner said in an interview just a year ago that American's want GM's huge SUVs despite increase in fuel cost.
And our economy is sound fundamentally - isn't that what McCain said?
j/k - I'm having a cynical day today. Especially when I see the DJI rip 150 points in one minute. I think I take my chances in Vegas at this point.
Posted by: Molecool | Oct 1, 2008 2:09:38 PM
The party is OVER. No surprise here but it sort of hammers that point home.
My wife and I are both employed (right now), make pretty dough, and even we won't be buying another car in the next 5-7 years. And one car is already paid off, while the other one will be in 12 months.
I can only imagine what people who owe more on their car than what they're worth (and there are many of these types) will be doing over the next 5-7 years.......read: NOT buying new cars. A car is nothing but a burning money pit and many used cars work just fine, thank you very much (my '01 Toyota Corolla with 72,000 miles on it runs great! ). Used cars might be a good industry though.
Posted by: Jeff M. | Oct 1, 2008 2:13:22 PM
scorpio @ 2:06:08 PM
Let’s make that an even $100 B.
Posted by: DL | Oct 1, 2008 2:15:05 PM
I now see why so many politicians are pushing the bailout's pallative effects for the consumer.
Ensuring that consumers can get credit to purchase vehicles and other fluff is obviously what will save the economy...
Silly me, I forgot about the car dealer lobby and their clout.
This is not a forest fire. Setting controlled burns works in nature, but using more leverage to fix leverage compounds our problem instead of fixing it.
Codependent behaviour is exhibited by our current economic setup (at least in conusmer focused niches). The businesses leveraged themselves to sell more product to a leveraged consumer. Building card houses was never so easy.
Until the leverage issues are solved (business and consumer) and personal savings rates get above 3%, I see no reason to invest in our markets. Trade sure, but not invest.
Multiple compression is a bitch.
Holla, JR
Posted by: John Wellman | Oct 1, 2008 2:17:48 PM
So are we expecting a government nationalization of the Auto industry as well?
Posted by: Joe | Oct 1, 2008 2:18:48 PM
So are we expecting a government nationalization of the Auto industry as well?
$25B gets this process started..
Posted by: Dr. Kenneth Noisewater | Oct 1, 2008 2:23:00 PM
Poll question of the day.
How much will we spend on bailouts during 2009…?
a) less than 200B;
b) 200 B – 1.0 T
c) more than 1 trillion
Posted by: DL | Oct 1, 2008 2:23:38 PM
>Let’s make that an even $100 B (bailout)
I'll go one better,
Warren Buffet is about to buy some
F and GM right?
Posted by: MarkTX | Oct 1, 2008 2:26:41 PM
a small quibble - The decline should be on a Daily Sales Rate basis (there were less sales days in 2008).
A little less dramatic but, the overall trend is quite clear.
Posted by: AB | Oct 1, 2008 2:26:47 PM
Where'd the "all is well" crowd go anyway??
Posted by: Michael Donnelly | Oct 1, 2008 2:28:18 PM
I think Ford Motor Credit announce last week they were not financing new Mazda purchases in the US.
Posted by: Jay | Oct 1, 2008 2:29:19 PM
People can't buy cars but don't worry, our fine senate will raise the amount of FDIC insured to $250,000. Boy, am I grateful! Now I can breathe such a sigh of relief. They're workin' hard and it's hard work to work so hard to help us all out.
Throw them all out in November. Then maybe they'll help the economy by buying a car. Cognitive dissonance.
Posted by: AGG | Oct 1, 2008 2:30:20 PM
At the Toyota dealer for service on Saturday. The deserted showroom felt like a morgue. A couple of forlorn salesmen gazed longingly out the windows - like relatives at a funeral, left out of the will.
Posted by: Mind | Oct 1, 2008 2:30:47 PM
I hope Goldilocks didn't open up a car dealership after listening to Kudlow. What recession?
Posted by: larster | Oct 1, 2008 2:31:01 PM
You can thankthe sudden increase in energy costs for the dip...
Posted by: bc | Oct 1, 2008 2:33:13 PM
I have to think the if you want to buy a new car, the next 6 months might be a damned good time to go get a great f&^%ing deal.
I would love to get the new M3, but its rear wheel drive only, and that makes it a fun weekend track toy, not a daily driver.
The Toyota FJ (if they make a stick) might make for a good dual purpose car -- take it to the train station, and use it during weekends for truck type stuff.
This is how Deflation begins . . . sales falling off the cliff
Posted by: Barry Ritholtz | Oct 1, 2008 2:36:33 PM
Until incomes rise (not gonna happen any time soon) and/or auto prices come down (has to happen), or credit becomes cheap and easy again (could happen if we reflate and repeat past mistakes but is that wise?), autos will sit forlornly and wait for a buyer.......sound familiar?
All aboard the D-Train (just delayed in Brooklyn right now)........I see no other logical outcome at this point.
Posted by: Jeff M. | Oct 1, 2008 2:36:41 PM
When there's plug in electric vehicles will be time enough for buying new cars.
Posted by: Bcasey | Oct 1, 2008 2:40:24 PM
I think GM's employee pricing sale ended yesterday. Wonder if they are going to bring it back. Makes me wonder if this mark-to-market thing is spreading to other facets of the economy. What's a car (or house) worth if nobody will buy it?
Posted by: huxrules | Oct 1, 2008 2:45:30 PM
get ready for pension bailouts.
bernanke must be loving this -- finally gets to play in a real life lab, with us as the mice.
Posted by: john | Oct 1, 2008 2:47:39 PM
We'd like to help, but we spent all our money on houses and home equity loans and our plastic is maxed out and now were gonna be taxed to bail out those more fortunate than us.
Posted by: wally | Oct 1, 2008 2:59:11 PM
"Gosh, thank goodness we are not in a recession"
INDEED.
I'd like to hire one of those pie-throwing services, so the next time somebody says 'the fundamentals of the economy are strong' or some equivalent, they get it right in the face.
.
Posted by: VJ | Oct 1, 2008 3:07:45 PM
