January Sales

Jim, Doesn't look good.

I wonder what it's going to take for survival? Especially, the big companies, like our US manufacturers? They are at 50% or less, of last years volumes.

Ferrari sold 50 cars. What's that mean in dollars and cents? Can Ferrari sustain themselves, here in NA., with this kind of sales decline?

Ciao...Paolo

 

Seems suboptimal. 50% tank for Ferrari, 66% Lambo, and 75% for Bentley ugly, but Smart tanked 100%? Rolls only tanked 41%, but 34 cars?
I haven't had time to look at Automotive News, but "days supply" numbers should be pretty amusing, shows real inventory /sales gaps. Toyota and Honda never ran much beyond 30 days, US cars, dead ones, could be in 200 day supply range. I bet everything is in 80-150 range now, maybe worse.

 

Napolis,

Your web site says 0 sales for smart in 01/2009, but Mercedes announced 1776 units.

http://www.leftlanenews.com/january-2009-sales-figures.html

EDIT: Sorry, I missed "Preliminary Results"

 

Overall sales down over 40%... How would stuffing some more money into the automakers effect this? And what would they do with it at this point?

 

Well I wish “WE” would let them fail and the natural process take it course. Let the NAW take care of themselves, and let F, GM, and C start over without their employees running things with only there pockets on their minds and at "OUR" expense!

Jim

 

I've got it! Work in the plant a few hours without bennies, and you get a free car.
Manufacturers are one thing, but the countless suppliers, dealerships (waaay to many overall), and jobbers all employ thousands.
Big crater coming. Used cars that were trade-ins getting repossessed as dealers not paying off notes- not good http://www.msnbc.msn.com/id/28965129/?GT1=43001

 

Have you bothered to consider the consequences? I suspect not. If you did let them fail, we'd probably never get out of the depression that would follow shortly after. Nope, we have to correct for the stupidity we'd been struck with for the last 8 or so years, so why continue to follow the path that the market will fix everything. It might, but we sure don't want to pay that price. Probably the reason why we threw the bums out of office this last election.

Art

 

This is a key metric. We call it "days on hand" in my industry, and it measures the time it takes (in days) to turn your inventory. If you aren't turning inventory fast enough, it's a leading indicator that business is slowing.

So while "sales out" (unit sales from dealer to end customer) don't look so bad (yes, it's -50% growth, but still hundreds of thousands of cars sold), if days on hand is in the 80-150 range (which I am sure it is), that means manufacturing needs to STOP. The dealer absorbs the cost to keep inventory in stock, and essentially loses money / cash flow the longer it sits. At 90 days, the dealer is likely in dire straits as he/she is probably struggling to make payroll. The manufacturer, now having to cease production so there's not more of a build up, must lay off workers.

This is an utter mess. I've posted this elsewhere, and I'll say it again - "a bird in hand is worth 2 in the bush". Dealers should look to anything that will alleviate the inventory bottleneck while driving some revenue. Therefore, pennies on the dollar become a viable strategy - when people can buy a car for some deep discount (i.e. 50%) of the normal MSRP - with no gimmicks like employee pricing - then you'll see revenue generated, inventories declining, and plants begin to run again.

When you factor in the quality / price of used cars, the picture looks bleak. I honestly believe that nothing other than fire sale prices will solve the problem in the short term.

 

It must have changed, I show Smart up 177%.

The only other positives were Hyundai, Kia, and Subaru.

I want to say that whole spreadsheet is shocking, but I really didn't expect it to be much better than that given how things are.

 

Strange days indeed.

 

If the big 3 half huge drops in sales and overstocked for months, how is giving them more money going to help the company survive? Ford will be asking for money by the end of the year and I'm sure Chrysler and GM will be too.

Depression? I'm not familiar with the auto industry to really argue one way or the other, but it seems to me with the majority of plants in Detroi, I don't think that will make things drastically worse for the rest of the country than they would be otherwise.

 

It's a disaster, for sure. Keep in mind, though, that this is just the tip of the iceberg. When manufacturers report sales, this -usually- means deliveries to dealers, rather than sales to consumers.

This is where Ferrari does better than most other automakers. New cars don't stay on dealer lots very long -- if at all. Dealers for most other marques are choking on excess inventory right now.

And to take it a step further, the models that are selling are often those with the lowest profit margins for dealer and manufacturer. Manufacturers are using incentives to move vehicles and dealers are doing what they can to get old inventory off the lots (so they can stop paying loans on them.)

This is even affecting motorcyles. I have a good friend who is a Honda motorcycle dealer and the only in-demand product are the scooters, which a) he only gets allocated a few each quarter and b) he makes absolutely no profit on them.

Furthermore, all those that depend on new car, truck and motorcycle sales are hurting too. This includes the obvious, like truck bed liner spray companies, but also your local Allstate and State Farm agents (hence the corporations behind them!)

I wrote an article several months ago on why bailing out the auto industry was so crazy (using the estimate for bailout money at the time) and how that money could really do nothing to help -- rather just delay the inevitable. (http://fourwheeldrift.wordpress.com/2008/11/11/bailout-the-big-three-history-suggests-dont-do-it/ )
While the numbers have changed, I don't think the premise or logic have.

The bottom line is while I do see companies like Ferrari surviving long-term, there will be automakers that fail, as well as many dealers, insurance agencies, aftermarket parts suppliers (catering to new vehicles), advertising-based revenue stream entities (newspapers, web sites) that will disappear.

BUT!!!

Keep in mind that in any down economy, there is an opportunity for many to benefit. If you need a new car, or you're looking for classic Ferraris...or a used truck and trailer to tow around your projects...it's a great time to buy.

 

An important question is if the sales not being made today are differed sales that will be largely made up when the recovery arrives or are the buying habits (like the saving habits) changing for good?

 

Even if they are deferred - how long with they be deferred to? IF you need a car, you have to buy one. I submit that purchases may defer for so long, but at some point the buyer would jump in.

I don't have the numbers, but they suggest that the buyer looks to the secondary market (used). That's DEVASTATING to the new car dealer. Which is again why I suggest they have to drop prices immediately and drastically. The plus side is they likely capture the customer for the service, so there's future revenue potential.

 

Yeah, notice that all of those manufacturers are relatively low priced vehicles that are good for their high MPG. Any other quality in a car right now doesn't really seem to be that important to the consumers. I'm thinking that when (& if!) we get out of this slump, the resale for these cars that everyone's buying will be horrible, and they will be in need of more money yet again to purchase their next vehicle.

Good point too. The feds. should take a good look at these numbers and possibly kill off some of the lesser performing manufacturers. Having them straggling around looking for help and money isn't helping anyone, including (especially) us.

 

I'm more curious about the base demand. A lot of car purchases are discretionary. If people learn to hold on to their cars longer the nature of the market (both new and used) will change.
Even based on the old higher demand model the industry had a large overcapacity.

 

I don't know how long the average new car buyer holds on to their car, three years? Now just imagine in a time of economic uncertainty those people put off buying another car for an additional year just to be safe. That would mean a 33% drop in sales over the long term. They still have a good car, the average car is over 10 years old and one just four years old will still have few problems.

They talk about "peak oil" and "peak credit". How about "peak auto sales"?

 

http://news.yahoo.com/s/ap/20090203/ap_on_go_co/congress_stimulus

 

Buy a car, get a check. Not a new idea is it?

 

In Ferrari's favor, the sales now are mostly scuderias. It is my understanding they sell for about 75K more than a normal 430 and I figure this amount is pure profit. The scud is basically a 430 with stuff taken out. The performance upgrades really cost nothing extra to produce.

Dave