GM's US sales plunge 45 pct., Ford down 30 pct.; industry could...

[Goldman]

A point overlooked is that car manfacturers are victims of their own success in building vehicles that last longer. Not the planned three-year self-destruct models of the 1970s and 80s. Today's cars easily can go 250,000 miles and in some cases, such as autos used for taxi cabs and limos, 500,000 miles are not unusual. Result: excessive prices for cars leaves people keeping their autos longer with lower sales figures following.

[I_m just a regular guy]

I work for a major automotive supplier who has business with every car maker in the world - Ford, GM, Puegot, Renault, Mercedes, BMW, Chrysler, Toyota, Honda, Mitsubishi, Nissan. Issue is that right now in the US, people are scared and not spending. They are not spending on cars, they are not eating out, they are not spending on new mobile phones, they are not buying boats, they are not going on expensive vacations, they are not flying on airlines, andsome are cutting back on expensive cable TV.

True that the US automotive industry has sins of the past as many companies do but thats not the main reason for this latest fall in sales. Its FEAR. People that are concerned about getting laid off (or in other terms - fired with a severence benifit) are not buying big ticket items right now.

Should we jump on the Motorola bandwagon and badmouth them for all their past sins? Should we form a lynch mob for Kraft since they have announced more cuts? Should we crucify the airlines for their past financial troubles and their latest loss reports? Many companies are making drastic cutbacks even ones that are profitable - American Express.

This delay in vehicle sales does mean eventually people will have to buy again. The drop in gas prices may only be a temporary bubble so those car makers not focusing on fuel economy right now, may never get another chance to set things right.

[Stealth Warrior]

GMAC changed their credit policies, 1 in 10 now qualifies to buy a car with credit. Meanwhile, the dealers are paying floorplan juice every month to GM for the cars in inventory on the lot that GMAC won't give buyers credit for. The dealers DO NOT own those cars. Do the math people. Lot's of undercapitalized dealers will be falling by the wayside real soon. Get ready for dealer killing spree. It won't be pretty and yes, it's already started here in the northwest suburbs. Barrington Dodge, Extreme Ford (Crystal Lake), and rumor has it Rockenbach Chevy Grayslake).

[tresbone]

"If GM's sales were adjusted for population growth, October would be the worst month of the post-World War II era..." WOW!! Now that is one sobering statement! I grew up in the 70's and 80's and my father insisted on buying GM, even when he could clearly see that Toyotas were light years better. However, GM appears to have FINALLY closed the gap; the Cadillac CTS is an exceptionally beautiful, high quality vehicle. This from a guy who has NEVER bought an American car. The Corvette, Malibu, Acadia, G8, etc. are all very, very good. Alas, it appears they got it right too late...pity...

[No More Kickn Tires]

Well, it was only a matter of time before the distribution model for cars changed. Between the Internet and mega-retailers there's simply no need for SO many dealerships. Being able to go out, test-drive and kick the tires before buying a new care is soon going to entail doing a little driving - since MOST dealerhships will be closed by the start of 2010/14 months from now. Even with low-cost paper to carry their inventory they still need to meet their overheads {real-estate taxes on these sprawling sites, employee-benefits, parts inventories, etc, etc}. No, the long overdue shake-out is near. Remember how many travel-agents there were in 2000, well, there are less than 25/30% that number today. It's called "disintermediation." Those dealerships who haven't stressed and built relationships for post-sales service [that, over time, brings in the big-bucks] are soon to be relics of business models past. And, that's OK with me. We simply don't need so many dealerships. Buying a car is one of the the most unpleasant experiences there is. At least with disintermediation - when you're buying from the manufacturer, you know the margin added for the former retailer is now out of the equation. Perhaps direct sales by manufacturers IS the answer. Simply, the more hands a vehicle has to go through to make it to the end purchaser - the more the cost is run up. Fewer hands - less cost. I - for one, won't miss these moronic TV commercials from yahoo retailers. Fewer retailers could be good for the consumer, good for the manufaturers and good for the landscape.

[Marty McFly and Biff]

tresbone is exactly right!

American cars last ruled in 1977, some would even argue 1972-1973.

German and Japanese were 10 years ahead from 1980 or 1984 all the way until 2003-2007.

And now, finally, the US cars are VERY good. As good, or better than foreign vehicles. Malibu, Caddy, Mustang, Suburban, etc.... all quality, affordable, great style, durability, etc...

Maybe when the economy rebounds, they will. Stocks are cheap.

Also, many US cars are made with a majority of foreign parts, and many foreign cars are made in the US. The line has been muddied.

[No Liberal]

Stealth Warrior wrote:

GMAC changed their credit policies, 1 in 10 now qualifies to buy a car with credit. Meanwhile, the dealers are paying floorplan juice every month to GM for the cars in inventory on the lot that GMAC won't give buyers credit for. The dealers DO NOT own those cars. Do the math people. Lot's of undercapitalized dealers will be falling by the wayside real soon. Get ready for dealer killing spree. It won't be pretty and yes, it's already started here in the northwest suburbs. Barrington Dodge, Extreme Ford (Crystal Lake), and rumor has it Rockenbach Chevy Grayslake).

In the long run, fewer dealers will translate to more sales per dealer and probably more profit per sale. That assumes owners stick with it for a while to ride the storm out.

GMAC is not connected to GM anymore so they have no vested interest per se in the dealer network selling cars and trucks. They have their own, separate, agenda.

[PDX Tim]

I guess Toyota wasn't "saved by zero" after all....

[MarkRG]

Here's where they are hurting, they shifted to instant gratification by having x number of the model on dealer lots and pushing to sell them first, or in most cases now, only.

There was a time, not all that long ago, that most cars were something you went into the dealer and ordered.

But when they changed to this plan of having all models in stock, they burned themselves in that any slowdown at all in buying habits they suddenly have a logjam of new cars with no buyers. They are seriously going to have to go back and look at that way of doing things if they are to be able to survive shifts like this going forward. Momentum right now is what is killing them.

[Chicago Al]

I hate SUVs wrote:

A day late and a dollar short. If the SUV pushers had researched and developed alternative energy vehicles, smaller vehicles and alternate engineering long ago, they would be hitting a boom instead of a slump.

Who would buy the alternative energy and smaller vehicles?

[Paulyballgame]

Has anybody tried to buy or lease an American vehicle recently? It's no wonder the Big Three's numbers are way down - they are not competitive at all, especially when it comes to leases. Their car's residual values are so low that they cannot compete with the Lexus, Audi, BMW's of the world. I have tried to "buy American," or in my case "lease American," but their leases just can't compete. Sad, but true.

[Phil Anderer]

John Q wrote:

I remember Ford deciding to pay for all the SUV rollover lawsuits rather than retool it's line. Chevy introduced and killed an electric car all due to politics. American car makers (and big American corporations in general) only care about money. I say let the companies fail. I'm tired of fair weather capitalists saying how bad government is until their company fails. Then somehow socialism is fine as long as they get their government handout.

Two words: Tort Reform.

[RomanBconservati vesRIP08]

Let the oil companies bail out the Big Three. They can afford it & can't afford not too. The millions of 10mpg suv's Americans needlessly drive around did wonders for gas sales.

[NIMBY]

The Big Three bailout won't work. There's only one solution: finding a market bottom. The only way to do that is to allow market forces to work -- through bankruptcy laws, company failures, and the success of other surviving companies -- and quit trying to fight those market forces.

[Making No Cents]

It just doesn't make sense to buy from a company that may either be bankrupt any day now and void your warrantee.
Sure, I'd rather buy American, but - I'm not going to shoot myself in the guts to do so. With gas prices under $2 I thought about pick'n up a Hummer [I'm 6'2 & 238lbs and I've a few dogs and a family], but - am I going to buy such a vehicle when I might have any warrantee and/or when it'll be hard to get parts for it shortly? I don't think so.
Most of the cars out there are built for little people [I also have a bad back] and I wouldn't mind a full-sized {really 'full-sized'} care - if there were any of 'em to be had. The old marques [Lincoln, Olds, Buick, etc] have all been downsized. Most European and Japanese cars are also built for little people, so - what's left? German cars [7 series BMW's and larger Mercedes] appear the only solution short of an SUV {not from those American companies who may fold any second now}, or a truck [ditto to the aforementioned].
Since I have to buy something before the end of the year [tax considerations], I reckon I'll be sending more dollars to Germany. Like I said, I'm not falling on my sword for Detroit.

[HardToBelieve]

Stealth Warrior wrote:

The dealers DO NOT own those cars. Do the math people. Lot's of undercapitalized dealers will be falling by the wayside real soon. Get ready for dealer killing spree.

That is correct...collateral risk will result in fewer dealers. Capitalism at work.

[HardToBelieve]

NIMBY wrote:

The Big Three bailout won't work. There's only one solution: finding a market bottom. The only way to do that is to allow market forces to work -- through bankruptcy laws, company failures, and the success of other surviving companies -- and quit trying to fight those market forces.

Agreed.

[HardToBelieve]

The Old Railroad Man wrote:

I have a lifetime Railroad pass (54 years of railroad service as an engineer), so I take the trains almost everywhere I go.
I like to sit in the clubcar and watch all the cars stuck in the snowy traffic jams. It's reall great entertainment.
Highball the switches - next stop holiday land! Let it snow, let it snow, let it snow!!!!
The Old Rusty Rail

Too funny...but an excellent point. Mass transit for most American's sucks in this country.

[Steve321]

RomanBconservativesRIP08 wrote:

Let the oil companies bail out the Big Three. They can afford it & can't afford not too. The millions of 10mpg suv's Americans needlessly drive around did wonders for gas sales.

And why should the oil companies bail out the automakers? I mean, the automakers only built what Americans wanted. We wanted suv's with 10mpg and bought them. Now what?

[MTS]

I bought US for my first two cars - some time ago -- and they were terrible -- poor quality and poorer service. After that, I decided that I would not buy an American car again. It is true that US cars have greatly improved since those first two cars I owned, but the competition has improved as well. I have no regrets and am not going back to US cars. Why should I, after I tried twice and was badly burned?

The auto industry has been failing for thirty years and while it has made improvements, its love affair with gas guzzling small trucks (SUVs) leaves me cold. The argument that the industry cannot be allowed to fail because of the consequences for workers, suppliers, dealers, etc. has a major flaw. The industry has done nothing to stem its major systemic problems, so a bailout is unlikely to do anything to prevent its ultimate demise. The industry is going to fail, sooner or later. Basket cases like this do not turn around.(Can anyone think of example industries that did turn around after a bailout?) Why not just get on with it? It will be kinder and fairer for everyone involved. The taxpayer dollars will still be spent, but it will be towards recovery and not towards industry life support.