May Sales

The numbers aren't good -- for cars, ships, planes, trucks, equipment. Actual unemployment is extremely high (as was mentioned.) It's not a Republican thing or Democrat thing -- all the bad decisions by many industries have come back to haunt.

Interestingly, though...if you look at historical trends (and back when I was getting a degree in Marketing with a minor in American History, I looked at quite a bit of American business history), the best innovations and strongest companies got their starts in the roughest economic times. Even when we look at the auto industry, the most competitve products and the largest leaps in technology came with the worst economic times and seemingly most destructive/confining US government regulations.

Where there are pain and desparation, there are opportunities (as I write this from my home office in the house we bought last year for almost half the initial asking price!)

Just my humble opinion, but I think that some of the positive movement -- innovations, strong corporate moves, as well as some government things to take some costs off businesses (like health care reform) are going to hit strongly in October/November. This should allow stocks and other investments to creep up, which will alleviate some of the pain in the exotic car market.

The exotic car market, though, probably won't see a good recovery for another two years due to such strong sales over the last two or three years. Lots of good used cars hurts.

 

I'd say this a good analysis of consumer behavior. With so many years of overcapacity being maintained and fueled further by unsustainably cheap credit, the auto market correction will be felt for far longer than the recession itself. The economic "fear of god" many people have come to know means they're learning to adjust expectations and change their behavior entirely. In this case, not leasing, not buying as often, not buying as upmarket, etc.

Obviously, the winners for the near term will be mechanics. As people hold onto their cars longer and/or defer maintenance, they will need to be fixed. This is a non-negotiable expenditure for most people. Still, part of that fear means that used cars will only be a viable alternative for so long. Without a warranty, many buyers will feel as if they're flying without a net. And, since fuel prices are getting set to blast off as global trade warms up, I'd look for the more economical and emerging "eco" segments to be the industry's bellwether AND savior (efficiency will be that new value proposition).

BTW, the industry uses both "reported sales" (for immediacy) and "registrations" (such as Polk). Car dealers are notorious for fudging their sales to meet goals and incentives but registrations are often delayed and don't represent a particular weekend's sales promotions well. With such low volumes and high margin vehicles on their books, exotic dealers aren't likely to be fudging so I think reported is accurate.

 

Sammyb and thecheddar - both very sensible, interesting posts...