Automotive News: Have Auto Sales Finally Hit Bottom?
As Farago pointed out in his latest General Motors Death Watch, Automotive News [AN, sub] has suddenly decided enough is enough. The currently moribund U.S. new car (truck?) market is about to rebound. Excellent! I was getting tired of berating Motown for its unsustainable optimism. So, what are the facts that underpin scribe Richard Trout’s faith in the immediate future? “Heavy incentives on pickups and SUVs, combined with gasoline prices that are down about 40 cents a gallon from the July peak, may help the Detroit 3 and Toyota Motor Corp. shore up sagging U.S. sales.” Yes, OK, they “may.” But where’s the evidence they will? In fact, Trout relies entirely on GM’s spinmeistery. “But GM executives found some cause for encouragement in sales of the Chevrolet Silverado and GMC Sierra pickups and the giant Tahoe and Yukon SUVs. The big light trucks had their best months of the year, stoked no doubt by GM employee pricing incentives that whacked thousands off sticker prices.” Folks, not to belabor the point that RF made so eloquently, this is not what responsible adults call journalism.
@mel23 "The one I’m waiting for is that the public is almost as stupid as they’re going to get." Thanks for an out-loud morning laugh - GREAT line!
Sorry, but toe tag sales and early lease termination specials are just creating some artificial demand by pulling ahead some sales that they would have otherwise gotten later. This is not an upturn, nor a sustainable business model. Lets see what happens when the deals end.
This sales disaster will continue unabated if the American public comes to their senses and realized that, unless there are outstanding circumstances, 1. You should only buy used cars, and 2. Any car you purchase should last you 8-10 years and 150,000 miles, minimum, and 3. Nobody should ever pay more than $35,000 for a car or take out a loan with terms of more than 3 years. When times get tight like this, and it isn't just gas prices, but when wages stagnate and jobs continue to go overseas and house values drop, fiscal responsibility comes into sharper focus for even the most carefree consumer, and the fact remains that, beyond a certain point, cars that have greater capabilities than a base Aveo are a ridiculous luxury that due to the credit crunch are difficult to afford. Then again, gas prices are dropping and the consumer has a short memory and a hunger for status, so maybe if things keep going the way they have we might see a recovery soon.
The only buy used car thing always struck me as faulty logic. I mean, if no one buys new cars, where the hell are used cars coming from? That's like saying everyone should get a vasectomy, and then adopt some kids. There are plenty of cars where depreciation is pretty reasonable (cough Honda cough). You get the security of having a car during its most trouble free years and a warranty. And for people who can genuinely afford a nice car, why not get it? Status symbols might be ephemeral, but they get you invited to places where you wouldn't go driving a 8 year old Aveo. That has benefits as well. Now, not saying that these people taking out 7 year loans on an Escalade are exhibiting good sense, far from it. But somebody has to buy new, and it does have sizable advantages.