I think the numbers speak for themselves. Vehicle sales volume continues to dive and, contrary to a handful of reports I read yesterday, I doubt we’re near bottom.
Consider the facts:
Chrysler LLC sales were down by 34.5% last month, compared with August 2007.
Ford Motor Co. sales were down by 28.6%, and General Motors Corp.’s were off by 20.3%.
Even Toyota Motors Corp. sales slid by 9.4%.
And luxury brands like Porsche AG and Aston Martin were down by 44.9% and by 18.6%, respectively.
Will sales figures slide further? Most definitely, yes.
Though confidence is improving, consumers are still shying away from large purchases like automobiles. Instead, they are working to keep their expenses in line as the economy struggles and their budgets take a hit.
As a consequence of the slowing of sales since the start of the year, manufacturers have built up inventories. Even incentives, from 0%-for-72 months to employee-pricing-for-all, are losing their luster.
Sure, some companies posted improvements in their July sales data, but July happened to be the worst sales month in 16 years.
We’re nowhere near out the woods yet, which means the automakers’ predicament is likely to get even more acute. The deeper the declines, the longer a recovery will take.
Tune in next month, as the saga continues….
While not directly analogous, this reminds me of the early 90’s when the combination of strong European currencies and a recession gave huge headaches to some imported brands – namely Porsche, Mercedes, VW, and especially Peugeot – which curtailed it’s U.S. operations at the end of 1991. Alfa-Romeo and Saab were hit too, but Alfa had absorbed dealer losses by combining its dealer network with Chrysler and Saab was by then under the wing of General Motors.
The most precipitous sales drop among this group was Porsche’s – just over 4100 Porsches were sold in the USA in 1992, down from a high of over 30,000 in 1986, this despite a new model (the 968). High prices and a poor economic climate were mostly to blame for this, although Porsche had the additional albatross of, like Ferrari, being on the downside of the speculative bubble on high-end cars that collapsed at the end of 1989.
Circumstances are different this time, but again the high-end automakers who don’t have local factories are seemingly hit the hardest by a downturn and a very weak dollar…
This is a lot different than the early 90s in my opinion. You have the perfect storm. Fuel pricing, a 180 degree shift in customer demand, financial markets – real estate in particular – in shambles making securitizations for subprime near impossible and under-employment among other reasons is causing the auto industry to skip “recession” and move straight to depression.
I had retail stores throughout the late 80s and early 90s and I never had to face anything like this (fortunately). I do not see it turning around until 1Q2010 – if we are lucky.
Indeed. That’s why the FDIC has imposed rate caps for institutions that are not well-capitalized.