Economic Crisis "Worse Than $200 a Barrel Oil" for Car Industry
Car manufacturers are transitioning from one disaster to another, as the economic meltdown makes high gas prices seems like a blessing. Automotive News [sub] reports that two of the top prognosticators in the biz have looked at the proverbial tea leaves for the year’s U.S. sales figures and come-up with a soup tureen of not good. J.D. Power says 13.6 million. Global Insight says 13.8 million. GM says who called the whole thing off? Nigel Griffiths, Global Insight group managing director of global forecasting, has the answer. “We are moving from a liquidity crisis to an insolvency crisis right now. There is increasing evidence that this has affected the real economy, and as we see the automotive industry as the heart of the real economy, we are really taking a hit now.” As opposed to the fake economy (i.e. sub-prime loans)? Makes sense to me. But here’s the weird part. “It’s worse than if we saw oil at $200 a barrel on a sustained basis. At least with that, there was a transfer of wealth to countries like Russia that are inclined to buy automobiles.” So much for GM and Ford depending on foreign markets to stay afloat. George Magliano, Global Insight director of automotive industry research for North America, says you ain’t seen nothing yet. Magliano said it could take until 2013 for sales to recover to 2006 levels.