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U.S. Auto Industry - "the worst industry sales month in the post-WWII era"

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November 03, 2008 – Comments (8) | RELATED TICKERS: GM , F , TM

 

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

Deej

8 Comments – Post Your Own

#1) On November 03, 2008 at 7:03 PM, DemonDoug (32.83) wrote:

All new GM vehicles will be delayed, with the exception of the Chevrolet Volt and Camaro.

I am going to vehemently disagree with you on the Volt.  This country has been clamoring for electric cars for years, if not decades now.  I am likely to buy one myself, assuming GM survives long enough to make it.  And if they don't, I bet some company like toyota or hyundai or a group of angel investors will buy up the specifications and make it in fairly large numbers.

The Volt will be to the auto industry what the iphone has been to the cellphone industry.

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#2) On November 03, 2008 at 7:36 PM, toshimelonhead (35.41) wrote:

"The Volt will be to the auto industry what the iphone has been to the cellphone industry"

The Volt might be too late.  Other startups like Tesla and Aptera will beat their release dates for a 100+ MPG car by at least two years.  GM is cooked without more progress on the Volt.

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#3) On November 03, 2008 at 8:04 PM, abitare (35.78) wrote:

Good post. If you are bored take a watch of Who Killed the Electric Car.

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#4) On November 03, 2008 at 8:41 PM, DemonDoug (32.83) wrote:

Tesla is having huge problems because of mismanagement of finances, and other startups are just too small to make a big dent.  You need a car that can be sold in terms of 100-200k units/year, and those startups will never get there.  Tesla has put their sedan plans on hold.  The aptera is too quirky to get a huge mainstream appeal.

You need to have large-scale manufacturing, and that's what the Volt will bring.  The real competition will come if/when Toyota gets a fully electrified Prius, which may be sooner than later.

I'm not sure if other phones had touchscreen before iphone, but touchscreen technology has been out there for a while.  It was only the integration and the mass marketing and sales of the iphone that made it a mainstream thing, and that's why you need a Volt or a Prius to make that huge impact.

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#5) On November 04, 2008 at 7:33 AM, TMFDeej (99.22) wrote:

Doug, I'm not saying that the Volt is going to be a dud.  I think that it will be a huge breakthrough for GM and a major coup if it is able to be first to market with an electric vehicle. 

HOWEVER, it is going to be extremely expensive for what it is and I doubt that GM will sell enough of them to improve its financial situation much.  There are only so many people who are willing to drop $40-grand plus on a small car, particularly during a recession (if there is still one going on then) after gas prices have fallen significantly.

Deej

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#6) On November 12, 2008 at 8:51 AM, phi16 (29.69) wrote:

Why would anyone want to help a poorly run company, hemorrhaging cash, with a bad product line of poorly designed, gas guzzling automobiles, who should have seen the writing on the wall long before this current crisis by giving them money?

The iphone and Ipod made Apple great because those products were ahead of their time, well integrated and gutsy design innovations.  GM produces just the opposite.  Last and least.  Yesterday's technology with the day before yesterday's ideas.  Oh, strike that. They killed the electric car, they have no ideas.

 But "letting GM go under will be bad for the economy?" Keeping GM afloat is bad for the economy.  

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#7) On November 18, 2008 at 3:34 AM, awallejr (78.86) wrote:

Keeping GM afloat would be bad for the economy?  You really serious?  They were producing what Americans were craving.  Now that the market turned they are trying to adapt, but it takes time to change whole lines.  I blame the consumer just as much as anyone.  But these things can't change instantly.

 

This line was thrown out about lehman, how we have to make a stand, yadda yadda.  As a result the market tanked thousands of points and cost us billions if not trillions more. 

You let these companies fail and you pretty much guarantee a depression.  You also surrender tremendous market share to Asia.  Yeah that does our country wonders. 

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#8) On February 10, 2010 at 9:40 PM, BrandonPaulChevy (< 20) wrote:

I like your post simply because it is the reality nowadays. GM is known for making quality car and car parts. I bought a GM car just last month and for just two days the head gasket blown out. Disgusting!

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