U.S. Auto Industry - "the worst industry sales month in the post-WWII era"
November 03, 2008
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Automakers reported their U.S. sales results today and while things weren't as bad as the rumored -40% that I reported hearing last week (see post: The Inside Scoop: October U.S. auto sales will be much worse than analysts think), they were indeed worse than the -28% or so that analysts were looking for.
I haven't seen the "official" tally yet, but it appears as though U.S. light vehicle sales were down around 31% ot 32% in October versus the same period a year ago. Here are a few highlights:
General Motors (GM) down 45.1%
Ford (F) down 30.2%
Chrysler (CRAP) down 35%
Nissan (NSANY) down 34%
Honda (HMC) down 25.2%
Toyota (TM) down 23% (the only reason why Toyota wasn't worse is an unprecedented level of spending on advertising and incentives...if I hear that "Saved By Zero" commercial one more time, I'm going to lose it ;) )
GM called October "the worst industry sales month in the post-WWII era" adjusted for population growth. For the month it reported 168,719 in sales, compared with 307,408 last October. GM hasn't sold fewer than 200,000 in a month since at least 1975 and may not have been this low since the 1940s!
I have been unbelievably bearish on the auto industry for a looooong time, but I thought that even the worst run companies, like General Motors, would be able to pull through this mess without having to file for bankruptcy. Unfortunately, now I'm not so sure. Without significant government help, GM is a dead duck.
There's a great Automotive News article out there today (link: Cash crunch grows: GM delays vehicles - subscription required) on how GM has completely pulled the plug on just about everything, running the company "minute by minute." GM's management's latest move was to slash its product development budget. All new GM vehicles will be delayed, with the exception of the Chevrolet Volt and Camaro. Ironically, these "flagship" vehicles are both likely to be low volume and contribute little to the company's profitability.
New vehicles are the lifeblood of automakers. Without new, compelling products manufacturers slowly wither away until they die. Things must be bad at GM, or its management must be completely idiotic (probably both) for it to stop spending money on the development of new products.
GM is toast. I knew that it was a mess when I shorted it in CAPS in August of '06, -80.38% ago, but things are even worse than I had expected. There's no way that GM will survive until the magical 2010 date when the big savings from its new labor contacts is set to kick in without billions in government aid. There's nothing like using your and my hard earned tax money to prop up a poorly run company. Of course, this sort of thing is happening everywhere lately, so why not.
Auto Makers Post Sharp Drop in U.S. Sales
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