March Sales: Party Like It's 2005?
Peter Schiff (the man who saw the financial meltdown coming from a mile away) continually asserts that financial stimulus isn’t cure, it prolongs or postpones the problem. Any hardcore free capitalist will find it hard to disagree with Mr Schiff. There is no governmental stimulus such as in Europe. There is plenty of stimulus from the car makers.
March sales for the United States are forecast to explode according to ecreditdaily. They report that JD Power & Associates forecast that new vehicle retail sales going to increase 25 percent. New vehicle sales for the month of March 2010 are expected to be around 883,300 units. The majority of the growth is expected to come from a certain manufacturer who’s been in the media for other reasons. Our own Darth Niedermeyer, saw this coming.
As predicted, incentives are the reason behind Toyota’s rocketing sales figures. Namely, 0 percent financing. Easy money is back again. (For the select few with the right credit score.) For the first half of March 2010, Toyota’s daily retail sales rate was 40 percent higher than March 2009 (around the time of “Carmageddon”) and 70 percent higher than last month (we all know what happened then). Toyota officials are so thrilled with the way things are going that they may extend the incentives. But, that would be a bad idea as Jeff Schuster, executive director at J.D Power points out “While this may lead to a temporary increase in sales momentum, it could also potentially slow the pace of long-term recovery,” and there’s reason to believe him. In order to maintain their growth, GM and Ford are also ratcheting up their incentives by offering 0 percent financing. Which will have long term effects on Ford (who are just puling themselves out of a hole), GM (who are trying to make a case to the US government for the taxpayers’ “investment”) and Toyota (who’s chipping away at one of the reasons for owning a Toyota, namely resale value). As a certain sassy lassie once wrote “(we) have an interesting next few months ahead“
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I have to agree with Peter Schiff's economic assesment, the bailouts, etc. will only prolong the stituation and ultimately make things worse than they would have otherwise been. Billions the government gave GM and other corporations would have had a much greater economic impact as tax credits for consumers to buy vehicles made in the U.S. As it is now, we're financing GM's moving production to China. BTW, the tax-cheat exemption only applies to Obama appointees.
As of this morning Edmunds reports the only general cash incentives for Toyota's mainstream Corolla LE and Camry LE models is an unimpressive $1,000 rebate, or some 4 - 5% of sticker. (Indeed, the rebate may be less than the ripoff mandatory add-ons to MSRP.) There's low-rate financing, but the value of that is hard to calculate, plus it's dependent on whether the customer disposes of the car before the loan term ends. Edmunds reports no marketing support to dealers. In other words, with its top volume cars Toyota is focusing its marketing efforts on those for whom the monthly payment is everything. Those who probably shouldn't (and otherwise couldn't) be splurging on a new car. Toyota must be confident the better-off customers will return and continue paying premium prices.