“It’s like post 9/11.”
“It’s tantamount to a natural disaster, really.”
Believe it or not, these are quotes in the Los Angeles Times concerning the state of auto sales. I find it appalling that a lack of sales could be compared to tragedies, but then again I’m not the one trying to sell cars.
In September there were only two car manufacturers who posted U.S. gains: Maserati and Bentley. Even Honda, which normally weathers these types of slowdowns with slight gains, was down 24% from last year. And that’s considered a small decline of the major automakers: Ford declined nearly 34%. Nissan was down almost 37%. Toyota was off by 32%. Chrysler’s downturn was 33%. Believe it or not, GM is the one that gets to celebrate, slipping “only” 15% last month.
Obviously, consumers are keeping a tight grasp on their wallets. Even if they wanted to buy, dealerships are reporting that banks are only giving loans to people with the highest credit ratings. People can’t even skirt around the banks by leasing… some manufactures aren’t even offering leases anymore (Chrysler gave it up in August).
Car makers are dealing with an incredible convergence of events: high gas prices, a sinking economy, the crumbling of available credit, and increasing costs of production.
It’s evident that the car makers at the high end of the price scale will be fine, since gas prices and credit availability aren’t major issues for buyers. Honda and Toyota will emerge without major injury because of their competencies at building economical cars efficiently, and because of their solid financial strategies of the past.
Things will get tougher for Ford and Chrysler, who have specialized in high-profit trucks and SUVs for so many years. For them, a major back-to-the-drawing board strategy had better take effect, and fast.
I’d include GM in that group, but somehow they’ve managed to perform a September miracle.
I want to know: Will GM continue to lead the pack with the smallest declines in October?