The Inside Scoop: October U.S. auto sales will be much worse than analysts think
October 24, 2008
– Comments (8)
So I'm sitting at my desk this morning and I my phone starts to ring, I notice that the caller ID says the name of a major publicly traded auto dealer group. Intrigued, I answer and a secretary says please hold for Mr. XYZ executive vice president of a company that I will not name. Hmmmm, I thought to myself this should be interesting. I can't disclose exactly what we talked about, but while he didn't come right out and say it he insinuated that he believed light vehicle sales might be off as much as 40% in October.
This estimate meshes nicely with the anecdotal evidence that I am receiving from dealers. I spoke with someone at a Porsche store the other day who said that they have had three customers come in all month. THREE. Granted this is not a big store, but still it is very indicative of what is going on out there right now.
Compare this estimate from someone in the know to the estimate of an industry-wide decline of 29% that was in the headlines yesterday (US Oct Auto Sales Seen Falling 29% To 17-Year Low) and you could have one explosive combination when U.S. manufacturers report their monthly sales on Monday November 3rd. Of course, there's still a week left in October and sales are always skewed towards the end of the month in this industry so there is time for things to improve slightly.
Still, if I was looking for a quick trade, I personally would short automakers and large dealer groups heading into the announcement. I probably won't do so because I am saving my war chest to take advantage of what in many cases I believe is irrational pricing of quality companies that I will hold for a number of years (not to mention the conflict of interest), but it would probably make a good CAPS play.
Deej
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