Beige Book Cites Auto Woes

The Federal Reserve Board released its Beige Book yesterday, which provides anecdotal information about the economy based on reports submitted by the 12 Federal Reserve Banks. The book, which is released eight times annually, shed some light on the auto finance industry.

Auto dealers continued to struggle, and overall vehicle sales were sluggish in all reporting Districts as weak demand and tight credit continued to limit sales. Used vehicle sales improved slightly in the Boston, Cleveland, Kansas City, and San Francisco Districts, but new car sales remained feeble. Dealers in the Philadelphia District reported difficulty in obtaining financing for inventory purchases, and a few dealerships in the St. Louis District went out of business, but dealers in the Cleveland District reported minimal problems with floor-plan financing. While auto dealers in the Boston, Cleveland, and Kansas City Districts noted some improvements in the outlook, those in the Philadelphia and Dallas Districts expect continued weakness.

If I had to grade this, I'd have to give the industry a "Needs Improvement."

Is anyone experiencing/hearing anything different?

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Comment by Frank Rauscher on April 17, 2009 at 4:50pm: Using this report is like driving a car by looking in the rear view mirror instead of the front window.
The car manufacturers release their monthly sales numbers almost in real time monthly. When annual sales drop from 16 million units to 8 million, you know there are problems. But people have not cut their driving habits by 50% yet. Cars do wear out and used car prices are strong. Eventually, the public will find a better value on a new car over a used car and then the car companies will see sales growth. The question is "Will it be Big 3 cars or foreign cars?" I hope the UAW wakes up and helps restore "price value" to Detroit; otherwise, the sales will go to foreign cars (even though many are made in the US by non-union shops). And I hope that banks and captives will stop the long-term financing. Get the price down and cut the gimmicks to finance inflated Big 3 car prices caused by excessive labor costs.