Bailout Watch 582: September Sales Crater. Now What?

Robert Farago
by Robert Farago

Speaking in Frankfurt, Fiatsler boss Sergio Marchionne warned the world that post-Cash for Clunkers American auto sales are a “disaster.” Like you didn’t see THAT one coming. Sergio reckons the industry benchmark—the Seasonally Adjusted Annual Rate (SAAR)—will fall below the “conservative” 9.5 million SAAR estimated for September. Folks, that’s after August’s 14.1 million number. “Even GM’s Fritz Henderson has thrown in the towel,” iStock Analyst reports, “saying that September will be a ‘very weak’ month.” Me, I’m with Sergio. The September numbers will be so bad that Michael Moore’s rendition of Bob Dylan’s “The Times They Are a Changing” may even be on Bob Lutz’s iPod. Just kidding. But seriously, what now?

iStock takes stock and wonders . . .

We are not sure yet how the MSM will prepare the public for the collapse that is now expected in auto sales when they are reported in the first days of October. The bigger surprise is why the auto industry is not following in the footsteps of Senator Isakson and demanding not only yet another extension to Cash For Clunkers but also an expansion. At this point there is no point in the government pretending it is not subsidizing any and all industry.

You will remember, of course, that the last time the sky was falling in, the federal government spent over $100 billion rescuing GM and Chrysler (and Ford; but shhh, we don’t talk about that). The big question is: will Uncle Sam re-up? Will another $100 billion-plus of your hard-earned taxes disappear down a Detroit-shaped rathole?

This is, of course, a political calculation. And there’s no question that the political forces ranged against Bailout Nation are better organized and less patient than before. We could see a major battle—THE major battle—form around a Chrysler/GM triple dip.

To avoid that possibility, especially in the run-up to mid-term Congressional elections while still doing something—’cause we have to do something—renewing Cash for Clunkers is a logical step. The Cash for Clunkers “success”—i.e., its adoption without political wrangling or damaging Glenn Beckian scrutiny—begs for a repeat performance.

Which raises an uncomfortable question that iStock faces head-on (apply palm directly to the forehead):

As David Rosenberg and other economists have speculated, the government accounts for 80%, if not more, of all the “growth” experienced in the economy. The issue is that, as any first year analyst at an investment bank will attest, all such comparable stimuli are considered “non-recurring” unless of course, they become, “recurring.” But at that point the economy is effectively one based on central planning: the key construct in any Communist/Marxist economic model. Which, (un)fortunately, is where the US is now and will be for an indefinite amount of time.

Meanwhile, what WE want to know: can GM’s current crop of Old GM incompetents (i.e., their management) survive September’s sales news? They will, no doubt, point to everyone else’s sinking sales and say, see? Not our fault. Again. Still. But that one is getting old, and somethingmust be done. Look for heads to roll—especially when Chrysler and GM’s cash burn is exposed. IF it’s exposed.

Why wouldn’t it be exposed? Didn’t Fritz Henderson pledge, under oath to the U.S. Senate, to maintain transparency on all things GM? Why not face the truth? Now there’s a question for the new, “transparent” GM . . .

Robert Farago
Robert Farago

More by Robert Farago

Comments
Join the conversation
2 of 67 comments
  • Johnss Johnss on Sep 17, 2009

    @wsn: You should listen to the others -- the bailout and/or subsidies don't even remotely approach 'central planning' as it is understood in political or economic theory. There are many valid reasons to criticize the bailout or C4C, but suggesting that it is "central planning" is not one of them. While this may feed into the bizarre argument that Obama is "socialist" because he wants to have universal health insurance, it's simply inaccurate. Go ahead and criticize the bailout, public health care, anything -- there's lots in there to pick at. But when you bandy about terms that carry real significant meaning in a way that is simply inaccurate to anyone with a dictionary, you harm your arguments.

  • Krhodes1 Krhodes1 on Sep 18, 2009

    @Matt51 - It's not that cars are unaffordable, it's that people want more car than they need. Nobody NEEDS to commute to work in a 5000lb leather-lined pickup truck, or a $50K BMW. A $9999 Nissan Versa will get you there in the exact same amount of time, just with a lot less style. Similar to the fellow a bunch of posts back whinging about sticker shock because he wants a new crossover. Waaah - if what you are looking at is too expensive, how about looking at something CHEAPER?? What a concept! Automakers set those prices based on what it costs them to make the vehicle, with an expectation of everyone involved actually being able to make a profit on the thing! At this point, I think the American Empire has pretty much reached the "bread and circuses" stage. I just hope we can hold off the barbarians long enough for me to shuffle off this mortal coil! At that point I could not care less what happens. I am doing my part for the poor overpopulated planet by not breeding.

  • Alan Well the manufacturers are catching up with stocks. This means shortages of parts is reducing. Stocks are building around the world even Australia and last year had the most vehicles ever sold here.
  • Larry You neglected to mention that the 2024 Atlas has a US Government 5-Star Safety Rating.
  • Alan Why is it that Toyota and Nissan beat their large SUVs (Patrol/300 Series) with an ugly stick and say they are upmarket? Whilst they are beating the vehicles with an ugly stick they reduce the off road ability rather than improve it.As I've stated in previous comments you are far better off waiting for the Patrol to arrive than buy an overpriced vehicle.
  • Alan How many people do you see with a 4x4 running mud tyres? How many people do you see with a 4x4 running massive rims and low profile tyres? How many people have oversize mirrors for towing once in a blue moon? How many 4x4s do you see lifted? How many people care what tyres they run to save fuel? The most comfortable tyres are more or less the most economical.
  • Alan These are not very good off road vehicles. This price for this Jeep means it should of been an exceptional off roader. I watched a comparison between this Jeep a Patrol and a 300 Series. One part of the test has the vehicle in an off road situation which arises often, that is only 3 wheels have contact with the ground and one is suspended and another only has minimal weight (contact). This leaves two wheels diagonally opposite bearing the weight. A test the reviewer call the "Door Test" was carried out. Both the Nissan and Toyota could open and close all doors and tailgate. The Jeep couldn't. The twist in the chassis shows how poor the engineering was done. A monocoque constructed vehicle should be easy to make rigid. Jeep managed to produce a rigid vehicle in the XJ decades ago.Don't buy this vehicle for any off road work, it sucks.
Next