A local dealership was in the paper today. Owner discussed how interest rates on him are increasing and hurting his margins. He takes out loans to fill the lot with new cars among other things so there is an incentive to have as few cars on loan as possible The auto industry is really taking it on the chin in this economy.
i'm no expert but i thought this was standard pracitce for most auto dealers....they don't own the cars on the lot but pay interest every day on their inventory.....
the wall street journal this week showed that almost every auto manufacturer (including foreign ) had a drop in sales for september....except for ferrari but they only sold 300 for the month.........the journal spoke with the porsche brass who said they were not panicking yet and hoped the panamera (i think) will boost sales in 2010...even comes in a hybrid i think
here is some of the article
DETROIT -- U.S. auto sales reached a 15-year low with a double-digit decline in September as tightening credit and a financial system in crisis appeared to overwhelm any optimism about moderating gas prices.
Sales of cars and light trucks fell 27% to 964,873 last month, down from 1.31 million a year earlier, according to Autodata Corp. The seasonally adjusted annualized selling rate was 12.5 million units down from 16.19 million in September 2007, the research firm said.
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Associated PressCar makers are trying to pare inventory in a weak market.
At the Paris Auto Show,
Ford Motor Co. Chief Executive Alan Mulally and
General Motors Corp. Chief Operating Officer Fritz Henderson expressed pessimism about the outlook for 2009, saying sales were likely to be as low as the current year.
Most jarring for the industry may have been the severe drop for Japanese auto makers, widely considered the strongest players in the U.S. market, especially in the small-car segment. Hobbled by a weak truck and SUV sales as well as severe declines in sales for its popular Camry and Corolla models,
Toyota Motor Corp. sales fell 32.3% in September.
Honda Motor Co. dropped 24% and
Nissan Motor Co. saw its North America sales tumble 37%. Those declines reflect the depth of the recession in U.S. auto sales as well as some strategic missteps, including Toyota's recent foray into a struggling pickup truck market.
"Obviously, no one is immune to market shifts as dramatic as we have been seeing," said Dick Colliver, executive vice president of sales for American Honda.
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Getty ImagesFord Motor, along with other auto makers, has seen its pickup sales slump badly this year.
Toyota attributed its sharp decline to eroding consumer confidence as Washington battles to pass a $700 billion bailout plan to help restore lending. The company also blamed weak economies in California and in the Southeast, two regions where the auto maker traditionally posts strong numbers.
"I think it certainly put the brakes on the consumers. We saw that on the luxury side. We had folks calling up asking for their deposits back," said Don Esmond, Toyota senior vice president, automotive operations. "Consumers are worried about the value of their homes and their 401(k)s."
The largest drop among the Detroit Three came from Ford, whose dealers reported total sales down 34% in September compared with the same month a year ago. Chrysler LLC saw a similar drop, with monthly sales declining 33%.
The luxury market wasn't immune to a general wariness among American consumers against making big-ticket purchases even as gas generally remained below $4 a gallon.
Ford sales analyst George Pipas characterized the turmoil on Wall Street as "tantamount to a natural disaster" but added that auto makers probably had as easier time boosting sales following the Sept. 11, 2001 terrorist attacks.
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Associated PressUnsold 4Runners sit at a Toyota dealership in the southeast Denver suburb of Centennial, Colo.
Showroom traffic was extremely weak and sales fell off sharply in the last 10 days of September as consumers focused on the crisis on Wall Street and the debate over a bailout in Washington, Mr. Pipas said.
Michael Jackson, chief executive of AutoNation Inc., said tightening credit standards as a result of the nation's financial crisis is choking off auto sales. A year ago, 90% of those car buyers with top credit ratings were getting loans approved. Today only about 60% get approved, Mr. Jackson said.
"Consumers and businesses are in a very fragile place," said Jim Farley, Ford group vice president for marketing and communications. "An already weak economy compounded by very tight credit conditions has created an atmosphere of caution."
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Car Cast
David Patton and Mathew Passy discuss the
September auto sales numbers. It was another grim month and things may not improve for a while.
Bucking the trend, General Motors reported that its U.S. sales fell% in September, measurably better than its competitors. Much of that success could be tied to GM's push for consumer incentives and a strategy that boosted fleet sales rather than sales to retail customers. For example, GM sold slightly more than 19,000 Malibus but 10,000 of them were fleet sales, which are generally seen as less profitable for auto makers and potentially damaging to their brand's reputations.
GM's sales chief Mark LaNeve said the company's performance is good relative to the wider industry, but not indicative of a healthy auto industry.
"A few years ago I would have jumped out the window with these numbers, and we're on the 39th floor here," he said in a conference call from GM's headquarters in downtown Detroit.
Shares in
Porsche Automobil Holding SE skidded amid tumbling sales in key European markets and as the German auto maker revealed its normally robust growth had slowed.
Porsche, which is in the usually resilient high-end auto market, said it couldn't give an outlook in the "present economic situation," and shares in other European auto makers declined. Porsche shares fell €6.44 ($9.06), or 8.5%, to €69.36 in Frankfurt.
