And Now The Really Bad News…
US auto sales in the month of November are down to a 26-year-low, with losses ranging between 30-47 percent for the top six manufacturers. I went to visit one of my favorite Mercedes dealers this weekend to see how my friends were faring (truth be told, I was bottom fishing) and I heard one tale of woe after another. One salesman, who I have known for more than ten years explained that he had sold one single car for the month of November. His wife had worked for one of the banks that cratered a few months earlier, so they were trying to get by on his meager commission, without much success. Since they cannot afford their mortgage payment anymore and they are underwater on the value of their home, my friend is staring down the barrel of the bankruptcy option. Even if you slept through much of Econ 101 in college, you cannot fail to recall that when supply greatly outstrips demand that lower pricing is the only solution and I am not talking temporary discounts and special financing deals. Everything you own is worth less today than yesterday- your home, your 401K and your only consolation is that the gas costs less, retailers are cutting their throats to get your business and soon even food will cost less.
Hello, auto producers? When was the last time you announced a permanent price reduction across your product line- sometime before Germany invaded Poland, if I am not mistaken. There is no cost based excuse for why the price of any automobile should remain the same in 2009 and consumers know this and are simply going to sit things out until GM and Toyota and Mercedes announce their $9,999 Cobalt, $14,999 Prius and $39,999 E Class. Want to sell cars like it is 1998, then you are going to have to price them like it is 1998.
When my home is again worth as much as I paid for it, then maybe I will be shopping for that Black Series SL65. Until that happens, I will patiently wait to become the second owner at 30% of the initial selling price, a figure much closer to true market value in this economy.
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Hi, Mark. Well, you asked for some numbers. How are these? (They're not mine; I'm not that smart). Funny how my "guestimate" of 30% unemployment goes right in the middle of his figures, though, isn't it? As for Michigan, well I live here and we've been in a recession/depression for, oh, about 8-10 years now - so I'm just doing a WAG (wild ass guess) as to the 60% just by looking around at what'll happen when/if the GM and Chrysler companies fold up and blow away. We've lost our LAST car parts plant in the town where I work, for example, and I volunteer at a food pantry - so I have some clue. Here's that link - it's kind of long but absolutely terrifying, if even 10% is true. Which I unfortunately think, it is. It's very interesting to note the commentary about B.O. too http://www.theinternationalforecaster.com/printerfriendly/International_Forecaster_Weekly/Financial_Crisis_Only_Squandering_Our_Future By the way, what's wrong with 0-60 in 10 seconds as "fast enough"? Perhaps it's a matter of perception; if you've sat behind the farty ass of a horse in a carriage, then 0-60 in 10 seconds is plenty fast, isn't it? OK I'm joking, but what's wrong with using good stewardship? Just exactly when is "enough" - "enough"? Not forgetting that once again, perception is a big thing. When I was a kid in the 1960's, it was a pretty quick V8 powered car which would do 0-60 in 10 seconds. My wife's four cylinder Sonata will do 0-60 in under 9 seconds; gets 32 mpg on the highway (5000 mile trip to/from Canadian rockies last summer at 70 mph proved it), tops out in excess of 125mph (way faster than most V8 cars even from the 1980's), is safe, reliable, smooth, quiet - a great cruiser. Yet it's looked down upon as a prole car. The rest of the world sees it as a luxury car! We'll be joining them soon, I suspect.
Ronin, most cars sold are statues goods. You don't buy them for the service the provide but as a sign you can spend x amount of money. See for a good example every SUV sold. If you lower the price the only thing that will happen is that people would move to the new x dollar amount car.