Auto Sales Depression

no they have not, and the most riveting aspect of this is why not and why has it taken them so long to react to market forces that have been beating them into what they are today over the past two decades?

 

Please read the news before posting... the companies involved are selling off their jets (direct decrease in expenses) and are closing some dealerships (again, direct decrease in expenses). Those are just the two big items i've heard about that have come up in the past 2 weeks.

 

Doc

See, this is where we are in almost perfect synch.

As an example, have you ever flown on a major airline while it was under Chapter 11? Me too. Did anything bad happen? Nope, not to me, either

I just don't get how folks think insolvency will lead directly to liquidation. Like most small, medium, and large businesses, reorganization will allow them to trim all the fat, and hopefully emerge stronger, leaner, and better.

The biggest knock I have against proposed "guaranteed loans / bailouts" for the Big Three, is that we are now entering a very severe global recession. I just returned from a business trip that involved India, China / Hong Kong, and Singapore. They are absolutely feeling the effects!

This entire bailout thing is just completely nice person-backwards. Let's assume we - the taxpayer - run the printing presses and give this money. Actually, I think it will go through anyway. A done deal, gotta pay off the unions.

A quick aside: did you know that Elections Canada forbids corporations and unions from contributing to political parties? The wording is a bit clunky, but it's a step in the right direction

Elections Canada On-Line | Election Financing

Some Canadians think the Conservatives up here - who actually *are* fiscally Conservative - are rolling in dough due to business contributions. Um, WRONG, as the link proves

Ok, they get all this money. We're in a crippling global recession. As I tend to always live *well* below my means, consumers like me don't count anyway. But the average Joe Schmoe probably won't be able to get credit for a big ticket item, so he also can't buy a new car

So the factories stay open, they keep cranking out vehicles, the vehicles don't sell, then what? I think I used the humorous example of a conveyor belt taking the new vehicles directly into the smelter to be melted down, and turned back into vehicles again: economic Perpetual Motion

I'm hoping that saner heads prevail, and the Big Three are allowed to do what any normal business should do: reorganize. I just don't believe in Socialist bailouts. It sure is being wisely spent by the banks, hmmm?

jay

 

I personally think their faux pas in front of the first hearing had more to do with the decision to sell the jet.

 

I went to StatsCan - Statistics Canada - to look this up

Gross domestic product at basic prices, by industry

Although Manufacturing is the second biggest contributor to GDP, it is not the biggest. I drilled down

Gross domestic product at basic prices, manufacturing and construction industries

Now, on the basis of EXPORT balance of payments:

Exports of goods on a balance-of-payments basis, by product

Hope this helps. When in doubt, always go directly to an official source. Never go by hearsay or third hand information that may have been, shall we say, massaged to make it look differently

 

I thought the biggest part of the Canadian economy was back bacon and beer?

Tom

 

You can thank reckless credit policies for that, and no restraint on the matter of most purchasers

That's already highly improbable. Look at all the sacrifice Canadians made in the 1990's: dramatic cuts to transfer payments, social programs, debt payments, etc. A lot of Americans were living quite high while the average Canadian was making sacrifices

The last thing we need right now is more reckless spending. We tightened our belts, and it looks like we will have to do so again. Why can't you?

Oops, too late. It has been too late by, oh, about two decades

I would make the argument that the "real" unemployment rate is far higher than that. A lot of statistics is careful number manipulation. This guy makes it sound so scary, you feel like jumping off a cliff

Grandfather Economic Report - Home Page - by MWHodges

STATISTICAL WIZARDRY - by MWHodges

Yep, I believe it

 

Correct. I mean, why not just take these bailouts to the next "logical" step and give every family $50,000 to rush out and buy a new Chevy or Ford? Not Chrysler, as I have no idea who controls them

 

Quickly, *always* quickly. Especially if that bandaid happens to be near your groin.

Don't ask

 

Although I like Kokanee beer, overall I wish the Canadian economy produced Gin and Tonic

Heavy on the gin

 

Actually, these numbers are pretty close if you take "under 3 years old" to mean cars sold in the last two years (at the time of the survey): 33.9 is reasonably close to 16.5 + 16.9.

I think that's in part a statement of the improvement in vehicle reliability and rust-proofing. It used to be an engine was unlikely to go more than 100K miles and even if it did, the car would be a total rust bucket anyway (at least in northern states that use salt like MN).

This is something that escaped me at first - yes, we don't want the entire auto industry to disappear in the next year, that would be a definite blow. But if they go thru ch.11, renegotiate their union contracts, sell off some assets (like Volvo or maybe GMAC), and build cars that match today's car market, maybe fast-track some of the smaller cars they currently sell in Europe, then they have a chance of surviving long-term. If we bail them out for the next quarter, it's only going to last for the next quarter and they'll be in the same mess. If we're going to send auto makers money, why not send it to Tesla and CommuterCars and Aptera and Triac? Car companies that could really use a couple million to implement and safety-test their designs and sell truly efficient cars to the American public?

As far as sales dropping, if the economy comes back, there will be a lot of pent-up demand for new cars. If people have job security, they will definitely buy things.

I like the idea of giving people money for a car better than a bailout, but how do you make sure it goes to American car industry? Would buying a Ford made in Mexico with a Mazda engine be beneficial? Or the Korean Daewoo selling the Aveo under the Chevy name? Or a Toyota built in Kentucky designed in part by American engineers in Detroit?

Actually Daewoo is an interesting case study - overexpanded and went bankrupt in 1999, it's come back strongly and is an important ally of GM. Now it's GM's turn to re-organize.

 

I never even thought of it that way. Good point!

Exactly, that's why I had to throw in that absurd idea. But it isn't any more absurd than giving the money to the Big Three, and having the conveyor belt send the finished cars directly into the smelter

Economic Perpetual Motion