Auto Sales Depression

It's not too surprising. The auto industry helped create this by generating a sales bubble over the past few years. An endless stream of incentives helped support unnaturally high sales figures. When the economy and credit went into the toilet, the bubble burst and exacerbated the effect. The housing industry is going through the same thing.

Tom

 

commercial infrastructure is the next to burst

the value of the dollar will be toast in 3 years.

credit credit credit

72% of all black friday shoppers used CREDIT..we are doomed

 

Lets do a little math, Malorn...
First, how many cars do we have in this country? If we believe wikipedia, the US Bureau of Transit Statistics pegged the number at just shy of 251 million in 2006. Passenger vehicles in the United States - Wikipedia, the free encyclopedia

How long does your typical car last? Again from the Wikipedia article, it seems that the National Automobile Dealers Association asked this same question in 2001. 1/3 of the cars out there are more than 10 years old. 22% between 7 and 10, 26% between 3 and 6, and 13.5% under 3 years old.

So if we look at that last number, 13.5%, that means that roughly 33.9 million cars are under 3 years (36 months) old. Simple math would tell you that 34 million into 36 months means each month should be a little less than 1 million cars sold.

And here you're telling us that 2 years ago half of the estimated 3-year total were sold.


Auto demographics probably don't change very much. If anything, as quality and reliability improve (which you've claimed Detroit has been doing) you would expect the average age of autos to increase, not decrease. I haven't been able to find one, but maybe you can... i'd be real interested to see a graph of the past 20 years or so showing the number of new car sales per year and the number of cars taken off the road each year. My gut feeling is that the increase in cars on our roads has outpaced the growth in our population, so there would be a natural cap where sales would slow down. I don't know if we're there yet or not - the economic downturn probably has more to do with this than anything.

 

Which is why this auto bailout will do no good. I just returned early from an overseas business trip, due to the sudden appearance of a government crisis right here in Canada

The mood overseas is downright depressing. Just in a month, I was surprised at how quickly the mood in India, Singapore, and China have changed. We really are in a downward spiral

So what's the point of forking over billions of taxpayer dollars the government doesn't even have to spend (This will become one more component of the national debt), when - as you stated - vehicle sales have really slumped

It sounds like you want Socialism, or at least corporate Socialism. So you might as well give every household $50,000 to put into a new vehicle. I'm sure you would want a caveat the vehicle would have to wear a Chysler, Ford, and preferably a GM badge

 

If I bought a new car in the last three years, could I use the $50K to
build a garage with charging station using solar cells on the roof and in the
driveway to be ready when the Volt and the Big Three's other PHEV and
EV's come on the market?

Should that not come to pass, I'd be happy to use the equipment with a
non-Big Three made US PHEV, EV, or even a Toyota, Nissan, Mitsubishi,
Ox, the Chinese one, whatever...

 

I think you're missing my point, so I'll try again

The entire globe is racing down into a deep economic crisis. What use would it be to shovel tens of billions of dollars into a car company, if nobody is buying cars?

So what does a company like GM do then? Use the money to keep building vehicles, which will sit in dealer lots until the dealer lots are full, and then sit in factory lots?

Or do we just shut down the auto assembly plants, and keep paying the unionized workers their full salary? I'm pretty sure that is all the UAW - and CAW up here - really want

Another option is to set up a conveyor belt from the assembly plant exit straight into a smelter. That way, the new vehicles are made, employing the workers, the new vehicles are then sent on the conveyor belt directly into the blazing pits of hell, melted down, turned back into source metals, and turned back into vehicles again

Sort of like an economic Perpetual Motion machine

If you support Corporate Socialism, you - by default - are a Socialist. In that case, I would argue the money would be "better" spent if, instead of giving it to large corporations, it is given directly to consumers. Not in cash, but like a smart card, with caveats attached.

Obviously, no foreign purchases allowed. I'm unsure of the composition of Cerebus, the equity holder of Chrysler, so we had better exclude them too. I guess you'd prefer this magic smart card only be valid at GM dealerships.

So everybody can rush out and buy a new Chevy, the economy will boom, and life will return to normal. Sounds like a plan, let's put it into place

BTW I'm kidding about money being "better" spent. The "best" way to spend money, is to not spend it at all. To save it. But that's just a quirk I have

 

Of course, I have no problem with that. I further propose a $573,198 grant be sent to every household to improve insulation, replace gas furnaces with ground source geoexchange, purchase a solid gold litter box so the family cat can s*** on solid gold and not cheap, tacky plastic, oh, and also put a giant sign in the shape of a dollar sign on the roof.

The sign will have energy efficient LED lights that will blink in many attractive patterns

I need a drink

 

you are right. i just dont like the fear mongering about what if the big 3 fail... heck they have been failing for decades... why are they crying wolf now? shut em down,,, start from scratch. it wont happen,,, its all politics and the democrats need to pay back the UAW. if that happens we will be throwing good borrowed money away,,, and i will never ever buy another big 3 car again - ever.

this will be the start of the never ending money pit.

the big 3,, management and UAW make me sick now. they should be the priviledged class now,,, the only americans that we should not let go belly up and be fired... why? why them and not other americans who have families to feed?

 

Malorn,
The more you state your case the more I want to join a socialist organization. Nothing personal but the country is heading toward socialism thanks to the current trickle down leadership since the Reagan administration. I guess trickle down requires gravity and ethics being in play. I am even starting to doubt gravity exists these days.

 

The auto industry is big in Canada, too, and there's no doubt the failure is hurting. But why let the auto barons steal what's left in the government coffers? It's not like a bailout would magically revive an unsustainable industry. Oh, are those fuel tanks in the Lear fleet getting low? Here, let the taxpayers fill them up for you, poor little trio.

 

I think the point jayman is trying to make is that Detroit is going down, one way or the other, regardless of what we do about it. His contention is that no amount of government money will save Detroit in the long run, so why waste the money. I don't think anyone will argue that the impact will be huge.

Tom

 

...and both are in the crapper. These are interesting and scary times.

I suspect history will look back at those of us born in the mid 1900s and say that we were born into golden times. Things may become golden again, but there will be a lot of paradigm shifting on the way (which is a fancy way of saying "pain and suffering").

Tom

 

It's like ripping off a band-aid. Yeah, it can hurt... but it it better to do it slowly or quickly? As this applies to the auto industry, If we let them fail the impact would probably be pretty big... but then we can start to recover, the government can create huge incentives to create a new clean energy sector in it's place, employing all those same workers in producing solar panels and the like. If we instead try to keep Detroit going as it is, we'll wallow in a recession for a long time as things slowly go down the crapper. When the big 3 finally do fail, the government and people may be stretched so much that creating a new industry to replace the big 3 may not be possible.

Simply put... do you let the big 3 fail now, while people still have some money to spend in finding a replacement, or do you wait until the money runs out and the big 3 fail anyways?

 

Two weeks ago, the auto industry needed $25 billion to survive. This week it's $35 billion.

Big Three back on Capitol Hill asking for help - Dec. 4, 2008

How much will it be two weeks from now? Keep in mind that over the past 2 weeks the companies involved have actually developed plans to reduce spending by even more...