GM COO Henderson: US Auto Industry in Recession
GM's Rick Wagoner clone, Fritz Henderson, recently told the AP's Tom Krisher that the U.S. auto industry is in a recession. (Insert "Duh!" here.) Regular, non-lobotomized reader of Frank Williams' By The Numbers series would have come to that conclusion two months ago. Fritz trots out the usual explanations for GM's woes: "troubled housing market, tight credit and higher gasoline prices that are sending consumers from trucks to cars at a rate much faster than the company has ever seen." The last part is particularly odd and GM-centric, because the truck-for-car swap hits GM a lot harder than Toyota or Honda given each company's respective product mix ratios. Fritz then goes on to confirm what many have speculated: "The 11-week strike at parts supplier American Axle and Manufacturing Holdings Inc. has had only a minimal effect on the company's retail sales, largely because it had built up a large inventory of pickup trucks and sport utility vehicles at a time when the market shifted to smaller vehicles." By minimal, of course, Fritz means $800m in lost EBT (earnings before taxes, which in this case, is sales to dealers) as the AP diligently reminds us. Be careful Fritz, $800m here, $800m there, and pretty soon we'll be talking about real money.
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Trying to liquidate Silverados and Suburbans coming off lease these days can't be helping GMAC's financial performance....
"They now have an Aveo and a Cobalt" If you post an address perhaps we can mail sympathy cards :(.
Its not just GM getting hosed on residuals. BMW recently took a big right down for lower than projected residuals on lease returns. Not as many people want to belly up to the bar for the "Bavarian Money Waster" experience of a 3-5yr old off warranty BWM.