Ford CEO Predicts Sales Recovery by End of '09
And I predict Ford CEO Alan Mulally will be proven wrong. Of course, I could be wrong about Mulally being wrong. I mean, I’m the not-so-proverbial nutter in the attic. Big Al’s probably got an entire building full of MBA-owning sales analysts doing nothing but crunching numbers (and hanging out by the water cooler talking about how TTAC talked about them hanging out by the water cooler). I base my false dawn dismissal on three main facts. First, Detroit’s been blowing smoke up the media’s ass since The Boston Americans beat the Pittsburgh Pirates by two runs to clinch the inaugural World Series. If not before. I don’t trust a word they say. Second, same again, only this time not discounting the fact the automakers may actually believe their own delusions. Which is some deeply scary shit. Still. And third, housing starts.
TTAC’s own Ken Elias first gave me the heads-up on Motown’s final descent into bankruptcy two years ago. That’s when he brought my attention to the fact that US housing starts had more or less stopped. It was the worst of all possible worlds for Chrysler, Ford and GM, depending as they did on their pickup trucks for fat profits. When the housing market cratered completely, it was only a matter of time before all that low interest, easy credit home equity cash would dry up, taking car sales into the Sahara with it.
So, where are we now? In April, new housing starts dropped 54.2 percent from the previous year’s totals. Total housing starts: 458,000—the lowest level since Fulgencio Baptista checked out of Havana (1959). Building permits sank 3.3 percent to 494,000 units, the lowest level since the Commerce Department started keeping records (1960).
I reckon the situation is not unlike the car biz. The housing market has to absorb (or plow under) a huge inventory glut and disappear an enormous amount of excess production capacity before it will even begin to get back on its feet. But with the go-go economy gone, the “rabbit in the python” over-supply problem is digesting very. Very. Slowly. How slow? What am I, an economist? But anyone who figures that pickup truck sales are going to bounce back by the start of that most magical of years (2010) is kidding themselves.
Of course, if GM and Chrysler had been allowed to fail, Ford would have done very nicely indeed in that most profitable of vehicular genres, rewarding the only Detroit automaker who stayed away from the federal trough (thanks to the Ford family’s desire to maintain control, but hey, why quibble?). Never mind. If I was Big Al, I’d be thinking about hunker mode, rather than Annie-style promises to the troops. Just sayin’.
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