U.S. auto sales continued their slide in August despite stepped-up incentives to buyers, with Ford Motor Co. posting a 27% drop from a year earlier as sport-utility-vehicle sales plunged 53%.
Ford also lowered its second-half North American production forecast and revised its overall industry forecast to the low end of its range.
"We expect the second half of 2008 will be more challenging than the first half, as weak economic conditions and the consumer credit crunch continues," said Jim Farley, group vice president of marketing and communications.
Just as car purchases lagged oil prices on the way up, I'd expect them to lag on the way down.
Wouldn't you expect them not merely to "lag" the AC component of the oil price, but to take a DC hit? I mean, I'd like to believe that the American consumer has _some_ memory, and has maybe discovered that he/she can live with better fuel economy in a smaller package.....
OK, well, maybe not. But I'd like to believe it.
I cannot believe that you're talking about something as trivial as this when you could be posting about the protests at the RNC, Bristol Palin's Pregnancy (or, at least, Republican hypocrisy regarding same), or the decline in the price of oil.
This is appalling.
Ford's US operations, with impeccable timing, dropped the Focus hatchback and wagon, and turned the coupe into a low-options Escort replacement (the sport model has rear drum brakes? What the..?!), about six months ahead of $4/gallon gas. GM may be in comparable financial straits but at the very least, there's no shortage of Cobalt variants, Aveos, Auras, Astras, etc. on the road these days.
Of course, if oil dropping is a sign of an impending worldwide recession, yeah...
g'luck to any car company that was already on shaky ground.
Megan, I guess you missed how Nissan's sales went up over the same period. Next excuse?
Look, the American carmakers have impossibly huge legacy obligations that make them uncompetitive. There's really no getting around it. Unless they er, remove these obligations, any attempt to turn the companies around is just putting lipstick on a pig.
Megan,
What do you expect to happen when either GM or Ford declares, or threatens to declare bankruptcy? Are they "too big to fail"?
Coincidentally, I'm not sure what brings this to mind, but...many species of jay are well known for having a very striking exterior coloring that is sharply contrasted by a wildly high-strung personality and obnoxious, screechy calls.
I also hear that they can be quite sarcastic.
Mouse, I find it distressing, but not surprising, that you are commenting on my comment instead of commenting on an important post somewhere.
Is everyone associated with this blog devoid of an understanding of what is truly important?
Btw, a bit of trivia: my Scottrade account shows GM bonds that mature in three years are trading at yields of 28%.
I wish I could link it but I don't know of a quick, free, linkable source for corporate bond prices.
And for the record: the treatment of GM and Ford is complete B/S. They should not be allowed to pay a dividend when so many legacy obligations aren't covered. And unlike the rest of us ordinary folk, they're going to be able to discharge huge, irresponsible debts just because they're inconvenient. The pensions are payment for work done a *long* time ago and should take priority over residual owners of the firm.
What should happen is that GM should sell off all non-car-production assets (start renting), leverage themselves as much as humanly possible, whore out their brand name, and then pay down as many of these legacy costs as they can, using third-party insurers. Then, day traders can debate whether shares are worth three or four cents. But that's not going to happen.
But wait, Megan said the economy was "strong" just a second ago!
In other news, Mercedes sales were down 11%, GM down 20.4%, BMW was up 1% (on demand for the Mini) and Toyota was down 9.4% - so Nissan was clearly an outlier.
The Fed just released their Beige Book and, in a nutshell, said business was "slow" across most of the US last month.
Clearly, the economy is not "strong" and any attempt to paint it that way is incorrect.
Jaybird, mouse's comment also applies to the cars the american companies have been producing.
If you look at the documents on the GM investor site, you will see that GM is executing a plan to deal with retiree health care obligations. The pension fund is actually overfunded. Also note that GM suspended the dividend July 15 as part of a major liquidity announcement.
There is no question that the car market in the U.S. is in the dumps, although our August sales suggest that the auto industry may be feeling bottom. If that is the case, it would be good news for automakers, and the economy as a whole.
The auto business is no place for the faint of heart. But rest assured, GM is here to stay.
Ford should know that my Mazda is 6 years old and I should be in the market in the next few years. They owned a good chunk of Mazda when I bought it.
But what about poor Porsche? Sales down 45% to just 1,400 in August...and now they have to deal with both the GT-R & ZR-1 spanking their bottoms red.
Please approve my comment, Megan. Sheesh, two links to one site sets of the spam alert?
Mouse, I find it distressing, but not surprising, that you are commenting on my comment instead of commenting on an important post somewhere.
I find it amusing, and not surprising, that you are trying to interpose yourself into the position of editorial control over a blog that is not yours or otherwise under your direct supervision.
Here are two suggestions, though. If you feel the hostess is misusing her position, you can try contacting the Atlantic editorial board. Alternately, if you feel the hostess is fit for her position but underemploying her talents, you could try a politely-phrased request that doesn't deprecate existing material.
Or, you can continue with option three, which is to express your disgust, approbation, etc. while continuing to drive up the ad-hit counter through revealed preference (and much to the delight of the Atlantic's financial controller). In the off-chance you ever lose your inspiration for this activity, please consult your fellow birds bradfinch and the toasted nuthatch, who have worked it into an artform.
My Mazda is 11 years old and I'm nowhere near thinking about a replacement. With proper care, you should be able to get 150K - 200K miles out of any modern vehicle.
Which might be another issue for the auto companies...
Wait a minute. Does the decline in SUV sales, the inventory glut in gas refineries, the decline in consumption and increase in production mean that gas prices will reduce and stabilize without Federal government intervention, 10 year plans and public scapegoating of those damn speculators.
Who knew and why didn't they tell us? Doesn't the NYT have an economist on board?
I find it disgusting that you are trying to violate my First Amendment rights by telling me that I should go talk to someone else if I have a problem with Megan McArdle, Mouse.
As a matter of fact, I say without hyperbole that it is the worst thing that anyone has ever done.
Shameful.
Jay, only government can violate your 1st Amendment Rights, individuals or private actors cannot.
Secondary question - why are you not spending your time commenting on more important topics that you claim Megan is ignoring?
Two things:
1.) Its that Fall classic tradition of Oil prices shriveling away, don't worry they'll be right back to where they were next May, and I'll see the one issue I seriously disagree with the Hostess on sprayed all over every periodical I can find.
2.) Ford and GM need to put quality merchandise on their lot, and while they are better, Toyota and Honda still have the "market standard" cars. With Hyundai, Isuzu, and Mazda having the cheap stuff. Ford is benefiting from never being as big as GM, and the Mustang is selling.
As for GM somebody just needs to get this over with: En Nomeni Patri, eh I should probably stop someone may be deeply offended and I haven't recited any version of the Viaticum in 18 years.
The govt should bailout the Big 2.8 pension plans! That will be the ticket.
"As for GM somebody just needs to get this over with: En Nomeni Patri"
DING DING! You win today's most hysterical blog comment of the day. You will be in the running for this years blog comment of the year.
Congratulations!!
No hysterical would be betting on a miraculous turn-around in the next 5 years. By the way the last rites or Viaticum is a rite for the ill as well as the dying.
But lets say I did who here really thinks that between massive problems with United Auto Workers, a business that was geared to trucks and SUV's for the last 18 years, now having to switch over into the car market. Who here would say that GM will be A ok? I'm sure there are a few and I want to hear why. Because from my standpoint nothing is ever too big to burn down. I find it hard to believe that GM will complete a turnaround.
All GM needs is some Honda-fu magic and wa-la, all their troubles are gone....
How about a magic trick?
My BIL's mom had cataract surgery today. She's trying to get as much health care as possible (including catching up on stuff she's put off) before she gets thrown off the GM retiree health plan in 2009.
She is 80 and the widow of the former manager of the locomotive division.
So apparently GM is solving its legacy problems.
I don't know why they didn't have eligible people go on Medicare?!
The One Ford strategy seems a smart one in the long term, but the company's going to take a massive hit during the transition, with their intention to import European cars while the production lines convert from SUVs. Not just the exchange rate, but the price point and the cost of safety/emissions approval.
(For those not aware: the mid-term Ford strategy is to have a unified core model range, rather than having US flagship cars that are very different from the non-US ones. Ford has a good reputation in Europe; in fact, it's rarely considered an 'American' marque. The new Fiesta, designed in Europe because the US wouldn't originally commit to a joint process, is going to be the first example.)