Auto Sales Slump

[pwd72s]

Ford seems to be leading the pack. Here's a cut & paste of the story. Anybody's thoughts on what this portends for the economy in general are welcome.

DETROIT (Reuters) - Ford Motor Co. (NYSE:F - news) was stuck in a rut for the second straight month in October, as high gasoline prices continued to undercut demand for big sport utility vehicles and pushed overall U.S. sales lower.

Ford said sales, which fell 20 percent in September, were down 23 percent in October from a year earlier.

Aftershocks from the recent hurricanes, fuel prices that are turning car buyers away from gas guzzlers, and the lack of any splashy new consumer incentives programs, have all been cited as factors that hurt U.S. vehicle sales last month.

But Ford's sales have fallen for all but two of the last 17 months and its problems attracting consumers clearly seem to go beyond any seasonal, short-term factors. It has been bleeding market share to Toyota Motor Corp. (7203.T) and other Asian rivals, as Americans abandon vehicles made by the second-largest U.S. automaker in droves.

Ford can take some solace, however, from the fact that many of its rivals also suffered a sales slump in October. Highly-publicized summer incentives, including so-called employee discount offers used to clear out 2005 model inventories, pulled many potential car buyers into the market earlier than they might have been otherwise.

And the dreaded "pull-ahead" effect has cast a distinct autumn chill over many automotive showrooms, analysts said.

Uncertainty over jobs and the economy may also be putting a drag on vehicle demand, according to some analysts.

Nissan Motor Co. Ltd. (7201.T) said its October sales fell 13 percent as it, too, took a hit from flagging demand for big SUVs and pickup trucks. Sales of Nissan's full-sized Titan pickup fell 30 percent while sales of its large Armada SUV were off 23 percent.

Sales at General Motors Corp. (NYSE:GM - news), Ford's larger cross-town rival, are expected to be down for the third straight month when it reports October results later on Tuesday.

Chrysler said its U.S. sales rose a wafer-thin 1 percent, giving the U.S. arm of DaimlerChrysler (DCXGn.DE) (NYSECX - news) 19 consecutive months of year-over-year gains.

All sales figures are adjusted one less selling day in October this year than a year ago and also exclude the Detroit automakers' foreign brands.

Ford and GM are especially dependent on sales of pickups and SUVs and are known for producing some of the industry's least fuel-efficient vehicles.

Ford said sales of some of its large SUVs, including the Explorer, Expedition and Navigator, fell by more than 50 percent in October, compared with the same month last year while its F-Series pickup saw sales drop more than 30 percent.

Toyota and Honda Motor Co. Ltd. (7267.T) are among automakers expected to post modest sales gains when they report U.S. results for October later on Tuesday.

But analysts said U.S. light vehicle sales across the industry weakened to a seasonally adjusted annual rate of about 15 million units. That would be well below the 16.9 million rate in October last year and the lowest since August 1998.

Pointing to a key cause of the lower sales, industry tracking firm Edmunds.com said consumer incentives offered by automakers in the U.S. market dropped by an average of $589, or 22 percent per vehicle, in October compared with the same month a year ago.

It said incentives were the lowest since January 2003, when average incentives were $2,022 per vehicle.

Among Detroit's automakers, Chrysler had the highest incentives at an average of $3,206 per vehicle, according to Edmunds.com.

(Additional reporting by Poornima Gupta, Detroit)

[legion]

I think the simple fact is that there are too many cars on American roads. I'm not saying this from a congestion perspective, but from a people-willing-to-buy-cars perspective.

The market is spent. Everyone who wants a certain car pretty much has it right now. There is no need to buy another one. There are plenty of very slightly used cars out there. The market is saturated. It's going to take a few years before anyone needs to buy another car again.

[Porsche-O-Phile]

This has been coming a while. Both GM and Ford have been horrendously short-sighted for the last several years - more GM, but Ford is guilty as well. They've thrown all their cards into promoting these gas-pigging stupid-a$$ SUVs that now populate our roads like flies at a dump.

Factor in the skyrocketing cost of energy and it doesn't take a rocket scientist to figure out why sales are down - not to mention the fact that pretty much everyone that needs a car, has one. Or two. Or three. It simply isn't worth it to go out and shackle onesself to a 5, 6 or 7 year payment plan on a vehicle that's not very efficient and while energy costs are sure to rise, and while it looks very much like we're getting ready to slide into a recession - a very deep, prolonged one.

Those that truly believe in the free market believe that if they've made their own beds, they can lie in them. I personally wouldn't support any kind of bailout whatsoever.

[BlueSkyJaunte]

Time to build in more obsolescence. Maybe some dilavar head studs and special valve guides that disintegrate after 30k miles?

[legion]

In a way, GM and Ford made the coming slump worse for themselves with Employee Pricing. They put more cars out there to replace ones that didn't really need replacing. I think it will be that much longer before people think about replacing their cars...unless they start being priced below cost.

[BlueSkyJaunte]

There's a reason entire text books are written on the Toyota Production System.

[legion]

Originally posted by SoCal911SC
Note that the article does not say that ALL auto sales have slumped. Toyota and Honda are up. In fact, Toyota has now, for the first time ever, passed GM as the world's largest automaker.

Good. Maybe they'll finally get a fire under their collective @$$ and make some real, meaningful changes rather than just band aids.

[wludavid]

They'll come back up. Don't underestimate the ability for consumers to justify buying a new car to replace their dead car - meaning the one they've chosen to stop repairing, even though it's cheaper than a car payment.

[vash]

i will be in the market for a new truck soon. my S10 just wont die! it is even managing to look good for the past 10 years. i had a personal timeline of 10 years, and this year will be it. hopefully, i can buy a new rig, during a manufacturer's panic.

i am looking for better towing, and passenger space. maybe the new titan. (or a diesel).

[JavaBrewer]

I know people that buy a new car when their "old" car's original tires need replacement. Don't underestimate good old fashioned American greed.

Oh ABTW - even with gas at $3/gal (=$75 fill ups) we absolutely love our gas-pigging stupid-a$$ SUV Expedition. It's the best driving vehicle we have ever owned. Seriously.

[930addict]

Originally posted by SoCal911SC
But the real question for GM and Ford is what brand of car will that replacement car be?

Exactly. I will not own another American car. I've had so many problems with my Impala it's not even funny. I'm just glad we bought the extended warranty. My parents have had problems with their suburban and my sister's brand new ford f-250 6.0 diesel left her and her family stranded in the middle of Nevada. My nephew bought a brand new Chevy Silverado and the bed was on crooked! The quality just isn't there. US manufactures cut corners on quality and give their executives jumbo bonus' and compensation packages. When the Impala finally dies we're getting a Toyota Highlander.

[kumma]

I beg to differ with all this "american car bashing" my last 3 cars were a 98 Chevy Z-71, 00 Chevy Z-28, and 05 Ford F-150. Quality is there, every one has been fine with no problems or fixes needed. Each one has meet my needs at the time and I have been very happy with each vehicle. I will never buy a japaneese, koren, chineese whatever car. never had any interest and never will.

As for why auto sales are lagging maybe this stellar booming roaring "bush" driven economy really isnt booming afterall.

[yellowline]

Originally posted by SoCal911SC
Yep.
Note that the article does not say that ALL auto sales have slumped. Toyota and Honda are up. In fact, Toyota has now, for the first time ever, passed GM as the world's largest automaker.

Who says that? Toyota is dreaming of GM's 15% world market share. They have about 2/3 of GM's share in the American marketplace. What you say will definitely be true by the end of the decade, though.

vash, if you want problems, buy a Titan. Nissan has had severe quality problems as of late. Things like brakes failing...not Chevy beds being on crooked.

930addict, what kinds of problems have your family been having? From my limited experience, I tend to see people thinking every little problem on an American car as the end of the world, and people thinking "Eh, it'd be worse with an American car" when the foreign car breaks down.

And as far as GM and Ford making those SUVs, think of the profits they made. Take a pickup chassis, stick an SUV body on it, slather leather on the inside, and charge a sucker $50k. When you could make an easy $4k per vehicle like that (before oil went up), who's not going to go into that business?

I think GM and Ford would vastly improve if they didn't have to spend $10b a year combined on health care. It's difficult to engineer when you have obligations like that handcuffing you, and when the consumer demands incentives and a good deal on the other side. Give them $5b of that money back, and just think of the quality/engineering improvements that could be done with that. Management can vote themselves $300m a year in terms of benefits, but that's peanuts compared to healthcare obligations. Maybe management should go without, but if they do, it's not going to keep American automakers afloat.

Meanwhile, let's airmail our vehicle purchase money out of the country, never to be seen again...

[vash]

easy yellow

i am a big fan of american trucks. never had any truck from another country yet. i was just thinking of changing up a bit. i just saw a F150 4x4 that looked stunning. i will drive it later this week. new work truck in the fleet! what about the tundra?

[kaisen]

I've asked it a hundred times before, even in this forum:

What is an 'American' vehicle?

Ponder that for a bit, then I'll reply with my two cents

E

[red-beard]

Gas will be back down below $2/gallon soon. I paid $2.19/gallon over the weekend in San Antonio.

[kaisen]

I paid $2.129 today in Minneapolis

E

[yellowline]

Originally posted by kaisen
I've asked it a hundred times before, even in this forum:

What is an 'American' vehicle?

Ponder that for a bit, then I'll reply with my two cents

E

One built by a corporation where the world headquarters are located here.

It gets hazy when American-badged vehicles are built in Mexico, Korea, etc., so I'll add the stipulation that it additionally has to be built in this country by said corporation for it to be considered a "domestic" car.

[pwd72s]

I'll accept that definition. But I wonder..it is just autos, or are other durable goods sales down as well?

[kaisen]

I ask: What is an American car?
Is it the Dodge truck built in Mexico?
The Ford built in Canada?
The Pontiac built in Australia?
The Toyota built in Kentucky?
The Honda built in Ohio?
The Nissan built in Georgia?
The Mazda built in Michigan?
The Mercedes bulit in Alabama?
The BMW built in South Carolina?
The Subaru built in Japan but partly owned by GM
The Saab built in Japan but owned by GM?
The Volvo built in Sweden but owned by Ford?
The Chrysler built in Michigan but owned by Mercedes Benz?
The Aston Martin built in Britain but owned by Ford?
The Saturn built in Tennessee but with a Honda motor (VUE)?
The Mazda built in Japan but owned by Ford?
The Chevrolet Aveo built by Daewoo owned by GM in Korea?

You tell me.

The only 'independent' automaker appears to be PORSCHE

E