Vehicle Sales Halve
By Barry Ritholtz - March 3rd, 2009, 2:44PM
The data on vehicle sales continues to be nothing short of abysmal:
- GM’s sales fell 53%
- Ford’s sales dropped 48%
- Toyota’s declined 40%
- Volkswagen U.S. fell 18%;
- Nissan sales dropped 37%
- Mercedes-Benz posted a 21% decline
- BMW’s total car sales fell about 24%
- Honda sales dropped 40%
Hyundai Motor was the sole automaker to post a month over month sales gain (down 1.5% year over year).
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March 3rd, 2009 at 2:56 pm
Toyota sales down 40% and now they have approached the Japanese government for a bailout:
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=az4LvsoAwQJU
The bailout money would “be used to help offer loans to customers in North America”.
Toyota has plants in Kentucky and Mississippi. Can you imagine the keening from the Republican Senators of those two states if the Japanese government declines Toyota’s request? I wonder if this will get the attention of Tennessee Senator Corker?
March 3rd, 2009 at 3:02 pm
Go VW! having ‘only’ a 17% drop is a bit of a coup in this market I woud think. Not having a truck division to float probably helps, along with being the only car maker to sell an economic diesel in the states. Can’t believe no one else even tries.
March 3rd, 2009 at 3:04 pm
WTF,
Ha! I love it! Here’s another zinger…remember how all those ununionized southern Toyota plant workers were crowing about how they were fine and the US automakers could go hang themselves?
Well, looks like Toyota has them on the chopping block now. I wonder how these workers will fare when trying to negotiate with Toyota for fair treatment.
Free market ideology would say that the individual worker can go to the individual corporation and present his case. Of course, a more realistic scenario is that the individual worker will go to the individual corporation and be found beaten senseless in a dumpster the next day!
http://www.businessweek.com/globalbiz/content/feb2009/gb20090213_979998.htm?chan=top+news_top+news+index+-+temp_news+%2B+analysis
March 3rd, 2009 at 3:07 pm
Honda was down %38. this isn’t just a domestic problem. this is all the car companies. at it maybe that the size of the US market is getting reset to the new normal of less 10 million (or maybe 8 million) vehicles. at which point a lot more pain will happen as no car company in the US market will be the same size. most will be 1/2 or a little more compared to today. and this will take a lot more of us with them. this is just like houses. it is the second largest purchase by most consumers. and this could also be the result of baby boomers retiring as they were (or are) the biggest buyers of cars. and it also could be because of the wage destruction that has been going on. and when we finally settle on a new standard of living (a lot like the ones in the rest of the world) things may level off. maybe
March 3rd, 2009 at 3:08 pm
This story illustrates another side to the problem:
http://consumerist.com/5162727/jeep-incapable-of-selling-to-man-with-24000-in-cash
It is not just poor products, but shady tactics which make the entire process of buying a vehicle nauseating for people like myself. From bait & switch pricing, lying sales people, finance reps massaging the numbers, games with “extras” and on and on the whole thing seems like the definition of hell. I say down with hell.
March 3rd, 2009 at 3:20 pm
I am waiting for the day when Leftback can walk in with a wad of cash, dispense with the whole sales process, and buy a car at half price just so the dealer can make payroll. They have to be getting pretty desperate by now.
Of course I’ll miss the part where they send the chick with the long legs, high heels, short skirt and low-cut top to discuss the essential extras like the “fabric protection package”. It’s amazing how long one can take to hear the whole pitch, go and inspect the seats and feel the fabric before eventually saying “No”.
March 3rd, 2009 at 3:30 pm
WTF, no Mississippi plant just yet for Toyota. Only plans for one that keeps getting pushed back.
Good for Hyundai, although with their discounts/rebates I wonder how profitable they are compared to the rest of the pack.
March 3rd, 2009 at 3:42 pm
If Toyota really is planning to use their gummint money (assuming they get it — which they will, of course) to subsidize car loans, then they are idiots, as any fool can see Hyundai’s “layoff protection plan” is having some real impact on sales. Every auto maker with half a brain should immediately copy them, and allow customers who lose their jobs and are unable to make the payments to return the car with no credit hassle. Hyundai probably has a program set up to resell those vehicles as “reconditioned” with a full new car warranty, at a slightly lower price. It’s a brilliant marketing scheme that takes all the hesitation out of the picture for a vulnerable-feeling would-be buyer. Which is nearly everyone these days.
March 3rd, 2009 at 3:49 pm
Subaru is +1% Y/Y for Feb, +4% YTD: ttp://www.forbes.com/feeds/ap/2009/03/03/ap6120228.html
And that’s without Hyundai’s “Assurance” vehicle return-if-laid-off program….
/proud 2008 Subaru STi owner /
March 3rd, 2009 at 3:49 pm
leftback @ 3:20
Yeah, I’m waiting for them to cut the prices significantly.
(And they’ll still have to throw in the chick with the high heels and short skirt).
March 3rd, 2009 at 3:51 pm
DL Says:
March 3rd, 2009 at 3:49 pm
leftback @ 3:20
(And they’ll still have to throw in the chick with the high heels and short skirt).
_____
Be careful – she’s probably a high-mileage skank with a new paint job and a couple of screws loose.
March 3rd, 2009 at 3:51 pm
must be the cold that caused this. People just aren’t out looking. lol.
Lugnut, you make a good point about VW. There is a VW dealership in NJ that is running a radio ad around here that claims sales are up 19 straight months at our dealership. Probably a lie but VW seems to be holding up as good as you can be in this group.
March 3rd, 2009 at 3:55 pm
@ Marcus: Be careful – she’s probably a high-mileage skank with a new paint job and a couple of screws loose.
Not at the Porsche dealership, old sport. Quality German engineering. Vorsprung durch Technik.
March 3rd, 2009 at 3:57 pm
leftback:
Same deal – they just drive it hard and call it a classic ; )
March 3rd, 2009 at 4:00 pm
Aluminum prices have come way down:
http://futures.tradingcharts.com/chart/AL/M
And we all know what has happened to the price of crude (which determines prices of rubber and plastic).
So, labor costs aside, it would seem that the auto companies could cut the prices some.
March 3rd, 2009 at 4:02 pm
Leftback:
If they send that girl in, you may need the “fabric protection package” after the inspection :)
March 3rd, 2009 at 4:08 pm
franklin411–
Two years from now Toyota and Honda will still have their heads above water. The unionized producers won’t.
Think about it.
March 3rd, 2009 at 4:11 pm
DL,
Deflation. Prices have already dropped unofficially with all the rebates, etc. They should just make it official. No better sales pitch than “reduced.”
March 3rd, 2009 at 4:12 pm
johnhaskell @ 4:08
Obama will pump in as much money as it takes.
March 3rd, 2009 at 4:19 pm
That’s a bit strange- is this data from January? I have seen a decent amount of new cars out on the streets in the last month. So someone is buying.
March 3rd, 2009 at 4:38 pm
@hux: I have seen a decent amount of new cars out on the streets in the last month. So someone is buying.
That’s the boys from AIG FP driving the new cars. They got the protection package from Uncle Sam.
March 3rd, 2009 at 4:52 pm
I don’t get the hype about Hyundai’s assurance plan. It’s just a life/disability/job-loss insurance policy like can be written into every car deal, but with Hyundai you get automatically (whether you want it or not). Your average 20-something Hyundai buyer is going to get the offer same offer for around $10/month from the sleazy car sales person anyway, no matter who he/she buys from. So, while Hyundai’s marketing folk may be geniuses, this is nothing that I didn’t pay for on my Volkswagen I bought over six years ago. VW could have jacked up the price $100 or so, amortized it over the first 12 month of the loan into around $10 a month and done the same thing. I got the option to buy it (and cancel it several months later once I established a good job), while Hyundai owner’s get it for a year no matter what. I don’t see how that’s so great. People are buying Hyundais because they’re a good value (even after the not-so-free lunch is built into the cost) in the same way Wendy’s dollar menu is a good deal if you’re looking for calories to stay alive, but aren’t willing to buy not-quite-expired clearance items at the grocery store. In tough economic times, these are the decisions people will re-learn how to make (often times only because they think they have to, not because they actually do). Unless sentiment drastically changes, the used car market still needs to do a lot more adjusting (either through an aging fleet, or price increases) before these numbers are going to change. Meanwhile, auto parts stores will continue to do well.
March 3rd, 2009 at 4:56 pm
I wonder how the recession stats (unemployment, economic growth (neg.), consumption indices, etc.) break out on the Red State/Blue State chart.
March 3rd, 2009 at 5:48 pm
In the red states, the gun and ammo industry is having a banner year.
In the blue states, the MBA programs are kicking it.
March 3rd, 2009 at 5:56 pm
My brother-in-law is a GM of Ford store….so one guess what’s in my garage.
LOL
Cages suck. They take up too much room for the motorcycles.
2005 Kawasaki ZZR1200 for when I might need to take flight.
2008 Suzuki DL1000 for when I might need to pop a curb….or ride to Alaska.
1984 Honda Interceptor for when I want to feel like I’m back in high school for a bit….usually doesn’t last long.
:)
March 3rd, 2009 at 6:35 pm
After turning my leased Honda in July (expired) and getting a Buick, better deal, I have been annoyed by the warranty company getting at least 2 calls per week plus mail. This despite telling them repeatedly that I no longer have the car. For that reason alone I may never deal with Honda again.
March 3rd, 2009 at 7:32 pm
We can elevate the “noise” all we want but understand one issue. Joe- six-pack can’t afford ______(place your vehicle of choice here). Just like housing,….he can’t afford your fancy pants car. HELLO,….can anybody read this! Nobody really cares if it wipes your ass. CANT AFFORD IT! Earth to dip-shits…..the Pres and all his horseman ain’t gonna change that with all that funny money!
The decade of consumption driven by promises and vapor is over.
It’s over! get used to it!
Adapt or die.
Don’t tread on me!
March 3rd, 2009 at 8:01 pm
grumpoldvet:
you get the same calls with a GM owned vehicle. Extending warranties must be the biggest waste of money/scam of all time….Never ever get the extended warranty…it’s sort of like paying huge monthly health insurance…you’d be better off just putting in the money in an annuity, and then if anything happens to you or the car, just pay it out of pocket. You’ll be better off in the long run.
March 3rd, 2009 at 9:00 pm
what about bicyle sales ?? on the positive side…
bet they are up, and less air pollution
March 3rd, 2009 at 9:25 pm
@franklin411 agree
@willid3: wage destruction? New term I like it. Better connotation. Nails the situation perfectly. Why hasn’t a corporate CEO used that term, Oh, I know. Shareholder value. Who exactly are those shareholders?
Rumor has it pension funds were once a great way to juice your stock price, if you could get them to buy in.
Oh well, guess that time is over. Who now?
March 3rd, 2009 at 9:37 pm
Lew Rockwell did the math on GM losses and said that GM lost $4000 on every car it sold last year. Is this a sustainable business plan? As long as we make up the losses, nothing will change. As long as GM, the unions, and bond-holders think we will keep bailing them, the hard decisions and cramdowns will never be made. If the Gov had walked away at the beginning, they might have tried to save themselves. Now they rely on lobbying and threats to keep the party going.
March 3rd, 2009 at 9:44 pm
Umm…
Why haven’t the sales prices halved too?
2009 Camry LE same dealer:
October 2008 $20,078
February 2009 $18,680
March 2009 $19,100
Are these guys nuts or do they CDSs on Toyota?
March 3rd, 2009 at 10:09 pm
Ken H.
Agree 100%.
When the auto companies started using 72 and 84 month financing for an asset that basically depreciates to zero in 48-60 months, you had to know that end was near. If they had tried to develop affordable cars with as much enthusiasm as they developed their financing games, they might still be selling cars to Joe Sixpack.
March 4th, 2009 at 12:08 am
AT @ 8:01 pm.
For a while, I was getting tons of extended warranty calls for my 9 year old Nissan. The tone and attitude of the caller was peremptory and sounded like a bill collector, “This is the last call we are going to make…blah, blah, blah.” I always expected them to conclude by saying, “… before we turn this over to our attorneys.”
A few months ago I wanted to buy a new digital camera at our local camera store. The sales clerk really, really tried to sell me an extended warranty. I asked why I should and she told me the cameras broke often. I said, gosh, why should I buy a camera that is expected to break? Blew her circuits.
She continued to stress the likelihood of breakdown. I said none of my other cameras has ever needed a repair except for the one my baby dropped on the sand at the beach. Guess I better not buy something that must be that shoddy. Walked out of the store. Later, I got a really great one at Costco – no hassle, no extra repair warranty selling.
March 4th, 2009 at 12:42 am
Our new Sonata has about 800 miles on it. Nice vehicle. Lots of standard features. Great warranty. But what I like best about it is how much we paid for it. Was going to buy an Elantra but our local dealer only had two 08′s. Told him I’d buy an 09 Sonata if I could get it for the price of an 09 Elantra. Sold. Hell of a deal.
March 4th, 2009 at 10:32 am
Meh, happy to have my paid-off diesel Benz, just ticked over 418,000mi.. Maybe give her to a nephew at 500k, or donate.. Who has money to throw at depreciation in this economy? And don’t get me started on the comprehensive insurance you need when financing… I’ll never buy a new car again, unless I win the lottery or have some other windfall…
Motorcycles, on the other hand.. ;)
March 4th, 2009 at 4:14 pm
i am sure GM (and the rest) had lots of losses last year. after all, all of them had a major turn in market demand, followed by another, followed by another. never mind we are talking making financial products which have infrastructure attached to make them. so none can change that quick. and then there was the minor problem of not understanding their business. like thinking they had 2000 in labor per car. nope, not even with made up labor costs. i saw the report for how many hours it takes to make a car. most take less than 15 hours to build. even given a made up number of $100 per hour (not even close) thats 1500. what does make it bad is that low end of $1000 rebate up to $10000 rebate. and that only exists because tehr are to many cars on dealers lots. or at the plants. or piled up on the coasts (take your pick as to who’s car at pile up where as they all have them this way). i saw one article that if we keep the market as small as it appears to be this year, at least 50 car plants from all of the companies will be shuttered. no need for them. if i had been running GM i might have shut the plants down until the days supply was down to realistic level. even if that took until June of 09. might have been cheaper. but the dislocation of the supply chain would have been horrendous, parts makers would be gone as would a lot of dealers.