Since this summer's sales slump, Detroit's stopped bitching about the so-called "perception gap." That's the alleged difference between consumers' idea of their vehicles' quality– relative to their Asian rivals– and "the reality." Suddenly, the concept is a lot less important than finding something, anything fuel-efficient to sell. Besides, there's a far more catastrophic "gap" in play, one that threatens Motown's very survival: the "gap" between what a SUV is worth new and its value come trade-in time.
For most of the SUV boom, U.S. truck resale values bucked the domestic passenger car trend toward higher (not to say killer) depreciation. These SUV residual values allowed the boys from Detroit to deploy a whole list of sales tricks no longer available in the car market, especially leases.
It also made it much less painful to get an SUV owner into a new loan before the old one was paid off. Resale values stayed high both because of demand (aspirational buyers who couldn't afford the full price) and general ruggedness (they WERE trucks after all). When the boom was in full swing, SUVs were both selling at huge mark-ups and "selling-on" to new owners long before the vehicles wore out. It was a license to print money.
SUV resale values held up well during the incentive wars of the last five years or so. You would have thought increased incentives would draw more "second-buyers" to buy new, but no. The most likely explanation: increasingly easy credit stretching the resale market ever lower. The Big 2.8 held their market share, at an ever-increasing cost to profits.
There was no way that the recent run-up in gas prices would NOT impact SUV demand. That said, the drop for The Big 2.8 has been dramatic, past the point of catastrophic. Some of this is due to the SUV market's violent contraction, making the domestics a victim of their old success. But the truth is rather darker, and does not bode well for any near-term recovery of light-truck sales.
There are two essential problems. First, obviously enough, supply and demand.
Just about everyone who wanted to buy a truck in the last five years has one. Aside from vehicles wearing out and people reaching driving age (or truck-love age), there is little "need" for more vehicles new or used– especially as the "fashion" SUV owners, looking for a way out, outnumber the new blood. This surfeit of sellers is driving SUV and pickup truck prices into the basement, and then padlocking the door.
This is bad enough. But the second factor makes the situation much worse.
These days, most truck owners are "upside down" or "backwards" on their loan; they owe more than the vehicles' resale value. As re-sale prices continue to crater, their numbers are swelling into the millions. As the "gap" in value grows in a predictably ruinous way, truck leasing becomes practically impossible.
The only way to lure more buyers is with lower prices. This lowers resale value– again, more, still– and shuts more current owners out of the new market, as the depreciation exceeds the discounting. Again, the fact that these trucks/SUVs are quite durable (one reason they held value) is a bad thing.
At some reasonable level of industry production, it will probably take five years to get the glut through the market, and perhaps another three to get prices back up. BUT the domestic truck makers can't afford to throttle back on light truck production. The Big 2.8 have counted on trucks to bring home the bacon for over a decade. As we've said here many times before, don't have a plan B ready to go.
Toyondissan are a little less exposed to this light truck debacle– they can count on making money in cars. Aside from pickups, they stayed out of the most vicious price wars. While this kept their sales volumes comparatively low, the strategy maintained resale values at a survivable rate.
The Dai-san can shuffle factories, sell to the "choir" and maintain a presence in the U.S. market– until the sales environment recovers enough to sell to the "other" truck owners. Toyota can afford to take the long view on the Tundra. Honda can get by selling 200K "trucks" (Pilots, Ridgelines, Odysseys) to their loyal customers. Nissan can't afford the same luxury with the Titan; it's days are numbered.
For The Big 2.8, circles don't come any more vicious. They are STILL collectively building far more trucks than the U.S. market can absorb at a profit. If they cut production, they allow their competition to raise their prices just a little at the old volume. Cutting pickup production to salable levels would help the doer, but it would help the other two even more.
In other words, Detroit's game of Last Man Standing is also a matter of waiting for the other guy to blink. When one U.S. SUV/pickup truck manufacturer cuts back, bails out or goes under, the others will prosper. Relatively speaking. Realistically speaking, in the next five years, this is the only way Detroit's truck glut could turn back into a short term asset.
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I was officially late the the late 90’s tech stock bubble. Bought my current house at the height of the housing bubble. But at least I never bought an SUV or truck in the past 10 years. Finally I can fall asleep with a smile on my face.
“In other words, Detroit’s game of Last Man Standing is also a matter of waiting for the other guy to blink. When one U.S. SUV/pickup truck manufacturer cuts back, bails out or goes under, the others will prosper. Relatively speaking.”
I think this is what Toyota had in mind for the new Tundra, hence the increase in capacity of the San Antonio plant even before the plant was finished. Toyota has put themselves into a position where they can take market share (in what has traditionally been a highly profitable segment) not by conquest but by attrition. Toyota will be there to pick up the pieces, who else will be left is less certain.
Time for another round of “who didn’t see this coming?” The buff books have been warning Detroit to get on the ball since the 1950’s.
When gas falls below $3/gal after Labor Day, people will start buying up the glut of unwanted SUVs like they’re going out of style (which, I guess, they are).
Because Americans are that stupid.
Note to Ford: September 9 will be pretty much the ideal date to launch your new F-150.
Another prediction: The post-election Obama lovefest this November/December is going to be the needle that pops the oil bubble. I predict sub-$75 crude (and $2.25 gas) by Jan 1. It just may be enough to save the Detroit 2.
When the world realizes Barrack is not the freakin’ Messiah, though, it could be ugly.
Gas is going to fall below $3/gal? Is this what Obama says…no wonder everyone likes him.
Seriously though, what makes you think it will fall that far?
Pnnyj, Toyota got caught with their pants down just like Detroit did. To suggest that this was all some sort of master plan by Toyota is laughable.
On a related note, I have seen numerous stories where dealers are shipping large amounts of SUVs abroad. Perhaps, emerging markets like Russia will be the dumping ground for our unwanted stock of trucks and SUVs.
The details today regarding the substantial losses by Ford Motor Credit are very telling of how bad resale values are. Usually Ford could count on a profit from FoMoCredit. They are probably taking huge losses on lease turn ins, defaults, etc.
If Barack gets oil to 2.25, there will be a strong movement to add him to the Bible.
What I don’t understand is how they keep going when they know its this bad. Bob Lutz amazes me with his comments. They are almost “dillusional” comparing a Cobalt to a Civic or Corolla? They aren’t even in the same league when it comes to quality.
If I was CEO, I’d pull the leaders of the UAW in for an immediate meeting and say this, “Look, we need to make some immediate changes. We are going to have to shut down a lot of factories and lay a lot of co-workers off, but if we don’t do this none of us will have a job at all.”
But that won’t happen. They will move too slow, and by the time they start to apply the fixes the foreign Big 3 will already have their updates in place and ready to roll.
The only way I’d EVER buy Chevy or Ford is if it was a Mustang Cobra or Corvette (new Camaro too). Nothing else seems worth a look at all.
TEXN3 :
Gas is going to fall below $3/gal? Is this what Obama says…no wonder everyone likes him.
Seriously though, what makes you think it will fall that far?
The fall to $3 will have nothing to do with Obama. That drop is already starting ($4.15 to $3.85 here in just a week) due to the drop in oil prices. Oil is way way WAY overinflated, and is undergoing a correction, IMO. It will probably correct to around $100 as speculators see the writing on the wall and sell their petropaper. After a brief spike for Labor Day travel, I see regular finally ticking below $3.
Another precipitous drop in crude will happen after Obama is elected, and this will be entirely psychological. Do you have any conception the amount of irrational expectations heaped upon this man amongst the common people of the oil-producing world? On Nov. 5, there will be dancing in the streets of Riyadh, Tehran, and Lagos. A perception that the US will be fundamentally changed in its dealings with the world. All a crock of sh*t, of course, but the palpable, temporary era of good feelings will drive down the price of crude. A lot.
I think in the first 100 days of the Obama administration, reality will take hold, but it’s impossible to predict what will happen to the price of crude at that point. In my rough estimation, the supply/demand balance should be about $60/bbl, and everything above that price is a “psychological premium,” but the market is just too irrational to make sense of.
The Cobalt not in the same league as the Corolla? C’mon now. Have you sat in a comparably-equipped Corolla or Cobalt in the past six months? I have. Toyota does not have the upper hand (maybe a few mpg). This “assuming, without experiencing,” trend is not getting us anywhere.
My analysis ignores any oil company electioneering-by-gas-price conspiracy theories. Will Big Oil sell product at a huge loss to “buy” a McCain win in November? I don’t believe in such nonsense, but there are those who do. If it is so, we could see $1.99/gal gas starting October 15 and ending Nov 5 :).
Interestingly, I recally gas prices dropping rather dramatically right before 2006 midterm elections. Dems still won big.
toxicroach:
If Barack gets oil to 2.25, there will be a strong movement to add him to the Bible.
Even if it drops to $2.25 before the man even takes the oath (which I think is a distinct possibility)?
It will certainly inflate his already Chicago-sized ego to even more absurd proportions.
detroit1701 Says:
Here, here! I’ve had Cobalts and a last gen Corolla a few times as rentals. The Cobalt was competitive without comparing sell price. I have test driven the Civic – it dominates this segment and carries a well deserved price premium.
Keep in mind the launch of the current Corolla was delayed a year after Honda bought the current Civic to market. I’ve previously owned a Toyota and routinely drive others owned by family members. I find Toyotas boring & at least through the early 00s equipped with painfully uncomfortable seats.
Hypocritically falling into the same “assume, without experiencing” trap I’m criticizing, I haven’t made it out to test drive a new Corolla and likely never will.
detroit1701:
The Cobalt not in the same league as the Corolla? C’mon now. Have you sat in a comparably-equipped Corolla or Cobalt in the past six months? I have. Toyota does not have the upper hand (maybe a few mpg).
The new Corolla is bloated pig of a compact. I used to say, “If you like to drive, buy a Civic. If you hate to drive, buy a Corolla. Either way, you can’t go wrong.” But now I’d probably recommend the 3, Sentra, OR Cobalt above the Corolla.
The 2009 model lost all the things that made it great, while keeping all the things that made it suck. It’s a cheap-seats, slightly smaller Camry.
To me the Cobalt and the Corolla are the same car
The new Corolla is huge compared to the Cobalt. Probably its best saving grace is it will last forever, but do you really want to drive one for 20 years?
The ‘Balt is vastly underrated, perhaps more than anything else on the road. I’m not saying it’s a Civic killer, but it’s no dog, especially if you can deal on the price.
I don’t think that the SUV will ever be fashionable again anytime soon. The only reason why the SUV got big in the 90s was because Ford proved with the Explorer that SUVs can be friendly to the average person, and the booming economy. The main reason why people bought these gigantic SUVs was for “Keeping up with the Joneses” purposes. (Mine is bigger than yours!!!!) These things were huge and luxurious.
The reason why the value for these things have tanked is because just about anyone who bought these leased them. We all know by now that anyone who is of the “Keeping up with the joneses” type is the kind of person who has no money, but it willing to go up to their ass in debt in order to put on a show and look rich. These thing’s value have tanked because of the same reason why the economy tanked in the 1930s leading to the great depression: There was no solid foundation, everything was based on “pretend” money. Same goes for SUVs, the majority of these things were leased, and since everybody is exiting their leases early to get into Camrys, these things are never fully “funded” and are piling up on used car lots with no takers.
But, whether we like it or not, the economy is in a recession. Because of this, jobs are disappearing and money is getting tight. This is getting the average American to worry less about impressing people and stand back and access their most needs. The high gas prices are only making a bad situation worse.
So, in a nutshell, despite how cheap gas gets, there will be no demand for SUVs if the economy remains poopy. Besides, history itself will show that the SUV will never be popular again for a LONG time, just like any fad.
Wow…Axel, in the fantasy world in which your thoughts are currently residing, does your wife look like Carmen Electra too? Oh, and please tell me that somehow Wagoner lost his entire fortune in this fantasy world, and is working as the lowest-on-the-totem pole sales guy at a Chevy dealer stuck with 50 Aveos on pure commission…while Lutz is the lot attendant?
Its sort of a pet peeve of mine concerning both the numerous Cobalt sucks or the Corolla sucks comments. Both are perennial best sellers. I’ve driven the base 04 Corolla, I thought for what it was that it was an outstanding car. To me the Cobalt was simply a Corolla with a Chevy badge virtually the same vehicle. True I would buy a Corolla because I don’t trust the Cobalt but to me it’s virtually the same car.
Most people don’t drive and cannot afford BMW’s, Mercedes’s, Audi’s, Lexus’, Infiniti’s or even Acuras.
The Cobalt and the Corolla are entry level economy cars. The Civic is truly head and shoulders above both but then Honda in my opinion is an exceptionally well run company.
Ronin317:
Wow…Axel, in the fantasy world in which your thoughts are currently residing, does your wife look like Carmen Electra too? Oh, and please tell me that somehow Wagoner lost his entire fortune in this fantasy world, and is working as the lowest-on-the-totem pole sales guy at a Chevy dealer stuck with 50 Aveos on pure commission…while Lutz is the lot attendant?
Laugh all you want, but no rational supply/demand analysis can possibly justify $125 oil. The current price of crude is based on wonky economics and irrational fear. Meanwhile the OPEC nations are flooding the market with black gold, and laugh when we ask them to increase production. They’re already overproducing!
Or do you have a rational explanation for the price of crude? Because I’d like to hear it.
If you figure in depreciation, the Cobalt loses everytime, all the time.
Or do you have a rational explanation for the price of crude? Because I’d like to hear it.
Markets have not been rational since the firs tulip bubble in the Medieval Netherlands.
Actually, they haven’t since humans began trading.
While no expert, I agree that oil currently carries a “irrationality premium”. Yes I don’t see it going below $100.00/barrel anytime soon, if ever. Let’s keep in mind that it had been traded too low for decades, and is now catching up. Add to it the fact that it is a finite product (it’s not a matter of “if” peak oil will occur, but “when”), and you have all the makings of a long period of expensive oil.
Oh, and tar sands may not be exploited anytime soon after all: their exploitation requires enormous amounts of water, which then needs to be treated. I work in water chemicals, and both treatment chemicals prices AND demand are climbing. People are using more and more water even though they’re paying more for it. Adding huge amounts will be difficult. And I mean huge: in Colorado, water treatment for shale/tar oil may be DOUBLE that of the Denver metro area, i.e. completely impossible.
As for the small car discussion: why not buy a Mazda3. The civic has better mileage, but beside that, I do find the 3 superior in all aspects. And yes, I’ve driven both, but neither the Cobalt nor the corolla.
Sherman Lin Says:
Its sort of a pet peeve of mine concerning both the numerous Cobalt sucks or the Corolla sucks comments. Both are perennial best sellers.
McDonald’s Quarter Pounder is a perennial best seller, but that doesn’t make it better than a Hardee’s Thickburger.
Axel,
I agree the current price of crude is inflated because of irrational behavior, but $60 a barrel is a bit ambitious, don’t you think? I’m not sure we’ll ever see less than $100 per. I do think it will drop post-labor day though. I think you’re right to an extent, and tried to have a little fun with it. Sorry you didn’t find it funny…
AKM Says:
While no expert, I agree that oil currently carries a “irrationality premium”. Yes I don’t see it going below $100.00/barrel anytime soon, if ever. Let’s keep in mind that it had been traded too low for decades, and is now catching up.
The inflation-adjusted “historical” price of oil is $28. I think the appropriate supply/demand balance lies at $60. There’s your upward correction. I doubt oil was trading at 1/4th what it should have.
Add to it the fact that it is a finite product (it’s not a matter of “if” peak oil will occur, but “when”), and you have all the makings of a long period of expensive oil.
That’s as maybe, but right now the oil fields are gushing and there’s vastly more than enough supply to meet demand. Supply is not yet an issue, despite the 20-year discovery-production gap theory that has only been shown to be valid for US Oil.
As for the small car discussion: why not buy a Mazda3. The civic has better mileage, but beside that, I do find the 3 superior in all aspects. And yes, I’ve driven both, but neither the Cobalt nor the corolla.
I drove the Civic LX and the 3 (2.0L) back-to-back. The 3’s interior was junky by comparison, road noise was much louder, handling was (surprisingly) not as good, and the performance was only slightly better. The 3 had more toys and a better stereo for the price, but the Civic felt like a substantially nicer car overall.
Axel, “McDonald’s Quarter Pounder is a perennial best seller, but that doesn’t make it better than a Hardee’s Thickburger.”
A thickburger (a favorite of mine) is like 3 or 4 dollars here in Tampa and a Big Mac is like dollar fifty here.
A 3 series or a Mini is a much better car than either a Corolla or a Cobalt but then again they are much more expensive.
They are perenial best sellers because they deliver a lot for that price point. Again you can’t dump on either the Corolla or Cobalt simply because there are better cars at a higher price point. I note that the Civic is far superior to either but then again almost all Honda’s kick ass and even the Civic is a more expensive car.
Sherman Lin: I note that the Civic is far superior to either but then again almost all Honda’s kick ass and even the Civic is a more expensive car.
Just sticker-shopping, the Corolla isn’t that much cheaper than a Civic. Maybe $1000 less for the same set of features.
The Cobalt isn’t cheaper either, but then you usually have thousands of dollars of incentives and dealers who are willing to deal. That’s why I’d recommend someone check one out before looking at a Corolla.
Toyotas carry a “reliability and durability” premium due to a well-earned brand reputation over the years. Hondas are built just as well, and so are Chevys if you get one that wasn’t built on a Friday ;).
I might not agree with Axel, but he’s actually giving us falsifiable predictions about when he thinks the oil bubble is going to pop, unlike some others who refuse to say anything that might end up being proven wrong.
So in September and November and January we’ll be able to see whether or not he was right or wrong, which puts him ahead of most other folks.
Axel I haven’t compared in a while but is that true for the low end base models Civic vs Corola vs Cobalt.
In 2004 I think my mom paid 13k for a Corolla CE automatic and she got a rebate so it was actually less plus tax and tag.
nonce Says:
I might not agree with Axel, but he’s actually giving us falsifiable predictions about when he thinks the oil bubble is going to pop, unlike some others who refuse to say anything that might end up being proven wrong.
So in September and November and January we’ll be able to see whether or not he was right or wrong, which puts him ahead of most other folks.
If I’m right, I’ll be able to say “Neener, told ya so!” and if I’m wrong, I can just STFU. Nothing much to lose :).
All that said, looking at the last few years, gas ALWAYS spikes in the summer, and ALWAYS troughs in Jan/Feb. Remember when we dropped below $2 in early 2007? That was only 18 months ago. And I honestly think there will be a totally insane, irrationally positive reaction around the world to the election of Obama as President.
Of course, should McCain win, all forward-looking statements become null and void.
A VERY wild card is whether we, or our puppeteer, attacks Iran. We won’t know this until Jan. 20.
Why would “big oil” want a McCain win?
Isn’t 80% of world crude production sourced from gov’t owned areas?
Axel, my original comment was a bit ‘tounge-in-cheek’ and I still disagree with a $60/barrel price but honestly $100/barrel is just fine.
I haven’t seen prices drop here, in Boise (or anywhere else in the NW). The avg. is around $4.30 which is just fine with me.
The Mazda3 base leaves a little to be desired, but the Touring and Grand Touring are an excellent value. Of course, the GT was the model I test drove and bought and I’ve enjoyed it much more than the Civics I test drove when they were first introduced…plus the lack of a 5-door model helped sway my decision.
I agree with the positive reaction to Obama, because they’ll be duped like Americans. Look at the reception he has been recieving on his Mid-East and Europe tour.
Isn’t one of the theories about the price of oil that a substantial part is driven by investors pulling out of the stock market and buying tangible items – oil and other materials – look at the price of steel etc.
I’m not an expert, but I think the only way for oil to get to trend, or even $60/barrel would be a/restored confidence in the financial markets, and b/ slowing of China, India etc.
And here from the US colony moored off the west coast of Europe, I’m not sure that Obama or the other one is really going to have that much effect on world commodity prices.
Just my 2 pence worth, and I’ve probably got it wrong ’cause if I were that smart I’d be a lot richer.
Don’t forget the surcharge on oil that occurs with each Orange Alert issued by the Department of Fatherland Security just before the elections…..
I vote for the Sentra as the best car in the compact segment. The 3 and Civic (maybe the Cobalt) win on the sporty driving front but the Nissan is the most luxurious.
Cal Worthington Dodge here in San Diego is offering 50% off new Dodge trucks with a combination of discounts and rebates..
http://boongawnee.com/calworthington.com/carlsbad/WD071108.html
I took my sister shopping for her new car a while back and the Corolla interior was cheap in a 90s Cavalier way. I think the Cobalt has better interior materials. That said, she bought a Honda because we knew it would be reliable.
Gas won’t drop. The Saudis won’t help, they never do. All the conspiracy theorists thought we’d catch Osama before the last election too.
TEXN3:
The Mazda3 base leaves a little to be desired, but the Touring and Grand Touring are an excellent value. Of course, the GT was the model I test drove and bought and I’ve enjoyed it much more than the Civics I test drove when they were first introduced…plus the lack of a 5-door model helped sway my decision.
By the time you get to the 5-door GTs you’re well into the 20s on price. I bought my Malibu Maxx new for $21k, which is twice the size, nearly as fast, and has the same MPG. Handles like a bus by comparison, but when you can haul four adults in comfort with all their camping gear, who cares? I buy hatchbacks for their ability to haul stuff, and compacts for drivability and fuel sippage.
Though if there were a Civic hatch I’d be all over that.
Again the GM apologists with the “you just haven’t given the Cobalt a chance” nonsense. Newsflash: Anybody who travels on business gets a chance to drive this car, or at least ride in it (I’ve now ridden in three). It sucks. It sucks less than the Cavalier did, but that’s not saying much. It gets worse mileage in practice than do much larger and better offerings from competitors, but feels even cheaper and even crappier than it’s actual segment competitors.
gamper Says:
July 24th, 2008 at 12:08 pm
Pnnyj, Toyota got caught with their pants down just like Detroit did. To suggest that this was all some sort of master plan by Toyota is laughable.
There’s an expression that Warren Buffett often uses: “You only find out who is swimming naked when the tide goes out.”
Toyota has the financial strength to weather this downturn however it unfolds. No, I don’t think that they saw such a dramatic market shift coming but they’ve now got a competitive truck and the production capacity to steal market share if one or more of the D2.8 should fail.
Here’s a frightening mental image: Rick Wagoner swimming naked.
Correct, mine came to about that price, and quite honestly had planned on buying an Escape for Utah and Idaho driving but enjoyed the test drive with the 3 that I bought it (and some Pilot Alpins for winter). I absolutely loved the quirky EP3 Civic Si even though it was a 3-door model.
I buy hatches/wagons for the same reason. But the Malibu (or any other GM product) was never on my radar and would take alot to get one on there. And twice the size, while rational, is not enough of an arguement for me. But I’m glad that someone enjoys it because it showed Chevy tried to sell something practical. Handling does matter to me quite a bit due to the mountain roads I encounter in Idaho. And 4 with camping gear fits, but it a little tight. Still, got the job done quite well.
Andrew,
Well done. Nice to see someone gets it.
The SUV was a better buy when the depreciation was so low that it overcame the poor fuel mileage. The increase in fuel prices did not directly change that relationship. It was only the incredible drop in demand, largely due to pump shock, that caused depreciation to increase to the point that even if you got free gas, it was a bad deal.
Depreciation is expensive. Gas is still cheap.
TEXN3:
I buy hatches/wagons for the same reason. But the Malibu (or any other GM product) was never on my radar and would take alot to get one on there. And twice the size, while rational, is not enough of an arguement for me. But I’m glad that someone enjoys it because it showed Chevy tried to sell something practical.
WIN: Creating the only 25+MPG, sub-$25k midsize hatch/wagon on the US market. FAIL: running all of one corporate ad for it. I still get tons of compliments on it: “That looks really sharp! It’s huge inside! How much can you get one for?” (I have to disappoint them with the fact that it’s no longer sold.) And that’s before they get in and I step on the pedal and the grunty, torquey V6 throws them back in their seats. We always called it “GM’s best-kept secret.”
The handling isn’t bad, it just feels very disconnected after driving the wife’s Civic, which has laser-precise steering and carves corners like a sports car.
Coal to liquid conversion technology is more than 60 years old, the US has more coal than anyone else, the commercially viable price for CTL is equivalent to $45-60 per barrel (tar sands are even cheaper)… bottom line, $100+ oil long term is total nonsense.
http://www.knowledgeproblem.com/archives/002049.html
I was too young to buy a chrysler hemi in 1980, when they were giving them away, but this time i will take advantage of the “irrational revulsion” over oil prices to pick up a bargain in a big guzzler (maybe a V12 mercedes from the 1990s).
“When one U.S. SUV/pickup truck manufacturer cuts back…”
Haven’t all of the truck makers scaled back production dramatically and announced more plans to do so in the near future? It isn’t as if they continue to the run factories flat out.
It is one great balancing act. The price of fuel is going down but how much and for how long? Will the price drop cause us to return to buying 13 mpg vehicles? Will we file away the plans for electric cars, oil shale, tar sands, hydrogen power, wind farms, solar energy, biofuel, and off shore drilling? Will the problems in the housing market prevent people from buying anything? Will credit remain turned off or will it return? How can some dealers still advertise 0% financing and will this destroy them and their customers? Will fuel prices go down and stay down long enough to save the 2.8? Will bailing out the Frannies and the 2.8 cheapen the dollar and cause fuel prices to go back up? Will Osama die of old age?
I haven’t a clue as to what is going to happen.
I hope all of you remember your predictions and own up to them next year:-)
Lisa Ling for President!
Why should Oil prices go down? Us prints excess dollars that are not covered either by gold reserves or manufacturing. External debt exceeding 10 trillion, record trade deficits, dramatic extinction of US manufacturing base, abnormal money borrowing from abroad, middle class extinction along manufacturing, government overspending on military programs. Decline in dollar value. So before your cheap shots obamas give you empty promises, ask them why exactly should oil prices go down? And they shouldn`t! Fluctuations in a 10 bucks territory are just fooling you that prices go down!
Actually it doesn`t matter if gas prices are high or low, it matters how fast can companies adopt to customers needs, and japanese are always faster, more diverse and better! And if gas prices were cheap, japanese would continue SUV onslaught and wipe out detroit anyways. Japanese succeed not because they have fuel sipping cars, it is because they have trustworthy cars that are always based on their own platforms , sweat and committment to quality! Would otherwise Landcruiser be selling so good? And when gas prices go up they still stick to Toyota, because they know a company they can trust. DETROIT, HARD AND HONEST WORK AND INPUT ALWAYS PAYS OFF! What a pity that you haven`t noticed that!