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Baby, You Can't Sell a Car
Car sales are now at a 27-year low, reports the AP and Bloomberg News via the Cincy Enquirer:
Cars and light trucks sold at a 9.1 million annual pace last month, a drop from 15.4 million a year earlier, according to Autodata Corp. Total deliveries tumbled 41 percent to 688,909, the Woodcliff Lake, N.J.-based company said.
General Motors' sales tumbled 53 percent from a year earlier, while Ford's U.S. sales fell 48 percent and Chrysler's 44 percent.
The major Japanese automakers fared only slightly better. Sales at Toyota, which has its North American manufacturing headquarters in Erlanger, fell 40 percent.
While tumbling sales have been used as a justification by GM and Chrysler for the big auto bailout(s), Michael C. Moynihan showed that in fact those companies (and Ford, too) had trouble making money long before the current recession. Watch below to see why.
|3.4.09 @ 9:02AM|#
If the government just bought all those unsold cars and then sunk them in the ocean for use as artificial reefs we could solve two problems with only one stupidity. That's a 50% savings in stupidity!
|3.4.09 @ 9:10AM|#
Organized labor = organized crime. Bailing out Detroit is nothing less than the US Government acting as a collection agency for the mob.
just sayin\'|3.4.09 @ 9:14AM|#
Well, the feds pay farmers not to plant corn, so maybe they should pay car-makers not to make cars . . . .
|3.4.09 @ 9:14AM|#
I hear the bailout a comin´
it´s rolling round the bend
and I ain´t seen a profit since I don´t know when,
I´m stuck in stock collapse, and time keeps draggin´ on
but that bailout keeps a rollin´ on down to
GM/Chrysler/AIG/BOA..
When I was just a baby my mama told me. Son,
always be a good boy, don´t ever play with (hedge) funds.
But I bought them from a man in Reno just to watch him lie
When I hear those stocks a fallin, I hang my head and cry..
I bet there´s rich folks lobbying on the fancy congress floor
they´re pleading and begging for a few bailouts more.
Well I know I had it coming, I know I can´t get any
but the congress keeps a bailin´
and that´s what tortures me...
Well if they´d free me from this tragedy,
if that money was still mine
I bet I´d moved it all a little further down the line
far from corporate welfare, that's where I want to stay
and I´d let that sweet white powder blow my blues away.....
I bet I´d move just a little further down the line
far from coporate welfare, that's where I want to stay
and I´d let that sweet white powder blow my blues away.....
BDB|3.4.09 @ 9:16AM|#
Well, Toyota just got bailed out by the Japanese the other
day.
Seems to be a global phenomenon.
BDB|3.4.09 @ 9:27AM|#
Just for accuracy's sake, Ford was forced to appear beside Terri
Schiavo (Chrysler) and the Roulette Wheel (General Motors)*. They
didn't want to go since they don't need government checks, but they
were subpoenaed.
Ford is the only American car company that's making good cars right
now.
(*H/T to J sub D)
kilroy|3.4.09 @ 9:28AM|#
Has anyone asked BO and his lackeys what the cap on this auto
bailout is? When is enough enough? If GM, Chrysler and Ford never
sold another vehicle would the government just continue to fund
them forever? What's the limiting case here?
I completely fail to understand how this shit can be justified.
|3.4.09 @ 9:36AM|#
I completely fail to understand how this shit can be
justified.
Labor union contributions to Dems, of course. What more
justification do we need?
mike|3.4.09 @ 9:46AM|#
FYI, Subaru sales were up...now if anything were to happen to VT,NH, ME.......
BDB|3.4.09 @ 9:48AM|#
Subaru is weird like that. They're like the Apple of the car world, uber-loyal hipsters as customers.
kinnath|3.4.09 @ 10:09AM|#
Subaru is weird like that. They're like the Apple of the car
world, uber-loyal hipsters as customers.
I had five in row. From the mid-80s to mid-90s. I was happy with
all of them.
creech|3.4.09 @ 10:35AM|#
Germany is apparently paying 2500 euros to anyone getting rid of a car nine or more years old. Lots of takers, apparently. Watch for something similar here - after all, the poorer folks tend to be the ones driving the older cars (but have little money to afford a new car.) And, of course, this giveaway can be rationalized as helping turn the highways "green," and it sure will keep a lot of unionized workers at their jobs. Ten million cars, at least, are qualified, so the tab would be about $32 billion if all were turned in.
|3.4.09 @ 11:28AM|#
Has anyone asked BO and his lackeys what the cap on this
auto bailout is?
How much do you have?
|3.4.09 @ 11:31AM|#
Cash for Clunkers; it'll never fly, though. The marginal cost of
removing additional units of carbon and pollutants is too
low.
The Demos would rather do their social engineering with the tax
code: impose huge costs on new-car buyers to achieve miniscule
gains, and then subsidize them with tax credits.
If you just buy cars from people outright, you can't control what
they spend the proceeds on.
Ryo|3.4.09 @ 11:54AM|#
As mentioned above, Toyota is asking the Japanese government for loans now too. Speculation is Honda and Mazda will join them. The report I read said banks were only willing to loan to Toyota at an interest rate roughly 50% higher than the year before.
Jeff P|3.4.09 @ 12:41PM|#
Just curious: has anyone in the industry pushed for a law forbidding private citizens from selling their cars for money to another person? The music and movie industry pushed to abolish the robust aftermarket, I can easily see automakers branding cars as Intellectual Property and crying that only licensed dealers should provide them.
|3.4.09 @ 12:49PM|#
The auto industry is always the first to show the
effects of a recession. It also leads the economy out of one. I've
known this since before adulthood.
Every auto manufacturer is getting clobbered right now. I'm am so
not surprised that Toyota, Nissan, et al sales are in the
crapper.
|3.4.09 @ 12:49PM|#
Jeff, I don't recall any entertainment industry crackdowns on used record stores, or sales of used CDs/DVDs, etc. Did I miss something?
Jeff P|3.4.09 @ 12:59PM|#
RC: Garth Brooks condemned used record stores in 2001 (IIRC). After that several big labels floated the idea of penalizing mom & pop stores for selling used stuff, but Media Play (remember Media Play? Sigh. I miss them) started a brisk used disc business and the idea fizzled. Several Walmarts down south sold used DVDs for a time, and when the labels told them to stop they just laughed. The idea still gets mentioned occasionally, but nobody pays attention.
|3.4.09 @ 12:59PM|#
Moynihan is being his typical dishonest self.
Labor costs aren't excessively high. In fact the costs of the
current labor force at US auto companies is withing a dollar or two
per hour of the japanese automakers.
The problem is legacy expenses and paying for promises the company
has made in the past (like pension and health care for RETIREES).
Anyone who presents "labor costs" as a combination of current labor
costs and legacy pension and health benefits for retirees and then
compares them to the current wages that the japanese auto-makers is
engaging in hackery.
The bottom line is that the american auto-makers made promises to
their workers. And those workers accepted those benefits in lieu of
a higher salary.
It's not the unions' or the workers' fault that those expenses have
gotten out of hand. (It isn't the auto-makers fault either -- but
the automaker did enter into a contract and they have to honor it
-- they gambled that it would be smarter financially to push those
benefit costs into the future and they lost)
BDB|3.4.09 @ 1:02PM|#
"anarch | March 4, 2009, 12:11pm | #
Would someone please channel joe? I'm feeling
nuance-deficient."
The only decent defense of GM and Chrysler I've heard is
here:
http://www.youtube.com/watch?v=U7YBjjLKLd0
And even that is "well, the people on Wall St. are even bigger
bastards and you have them more".
|3.4.09 @ 1:25PM|#
Anyone who presents "labor costs" as a combination of current labor costs and legacy pension and health benefits for retirees and then compares them to the current wages that the japanese auto-makers is engaging in hackery.
The bottom line is that the american auto-makers made promises to their workers. And those workers accepted those benefits in lieu of a higher salary.
I'm sorry, ChicagoTom, but I'm having difficulty grasping the
nuance of your argument. On the one hand, you argue that it's
unfair to count these higher costs as "labor costs," but then you
argue that they are benefits that the workers accepted in lieu of
higher payments.
It *is* higher labor costs. Just deferred payments. If you want to
look at it that way, you can say that GM mortgaged their future a
long time and had absolutely insane labor costs in the past.
What you're saying is that it's now the unions or retirees' fault
that they're willing to screw over current workers in order to
protect their current benefits, they're just looking out for
themselves. And since the retirees have more votes in the UAW, the
UAW has no problem putting the burden on the poor saps who decided
to come along later.
but the automaker did enter into a contract and they have to honor it
Sure. Except now they're bankrupt, so if anyone is going to honor
it, it's going to be the US taxpayer. Are you really sure you want
to reward companies (and labor, and unions) for, in your words,
"gambl[ing] that it would be smarter financially to push those
benefit costs into the future?"
|3.4.09 @ 1:53PM|#
I'm sorry, ChicagoTom, but I'm having difficulty grasping
the nuance of your argument.
It's actually very simple.
People currently working in the auto industry do not make the
equivalent of $71/hour. The only way to come up with that number is
by including benefits to retirees. These benefits include health
care and defined benefit pensions to RETIRED workers.
The proper equation should look something like this:
total cost (including pension and health for retirees) / (current
workers + retired workers)
instead that $71 dollar number comes from an equation like
this:
total cost (including pension and health for retirees) / current
workers.
That is a bullshit number.
Current workers don't get pensions any more. They instead get
401(k) which don't cost the company neraly as much. The number
bandied about are an apples to oranges comparison designed to make
the unions and workers look greedy rather than addressing the fact
that the problem with the car companies is that they made promises
they can not keep and didn't fund their pension obligations
properly. Now chickens are coming home to roost because of economic
factors.
The comparison to the foreign companies "labor costs" (and the
implication that somehow it's the unions to blame) is bullshit. The
real average cost of current labor force of US auto-companies when
compared to the current labor costs of japanese car companies are
actually quite close.
As for the legacy costs, the japanese companies don't have as many
retired workers here in the US. And back home they have socialized
medicine so they wouldn't need to provide health care to their
retirees in Japan.
Pension benefits and healthcare for retirees aren't shouldn't be
added into labor costs when you are trying to calculate how much
the american auto-worker makes -- unless you are trying to
calculate some kind of historical numbers. Most current
auto-workers don't have a defined benefit retirement plan and their
health benefits when they retire won't be anywhere near as
generous.
If you are going to honestly compare the cost of the current labor
force and see how much they are making then you don't get to
include retiree benefits that will current workers don't get merely
to inflate what the "american employee" is getting when compared to
the japanese employee.
|3.4.09 @ 2:10PM|#
What you're saying is that it's now the unions or retirees'
fault that they're willing to screw over current workers in order
to protect their current benefits, they're just looking out for
themselves. And since the retirees have more votes in the UAW, the
UAW has no problem putting the burden on the poor saps who decided
to come along later.
What bullshit.
No one is screwing anyone over. The retirees and the auto-companies
all negotiated in good faith what was a fair rate of compensation.
In lieu of higher salaries up front the retirees accepted lower
take home pay to have security during retirement. The company
thought that was a good deal and accepted it. That's how contracts
work.
Since that time, the unions and the companies, working with the
common goal of preserving the companies (and their jobs) have
re-negotiated the terms of those contracts for new hires.
I don't see how anyone is getting screwed over. New hires aren't
losing any benefits they had. They just don't get benefits as good
as the retirees. So be it. Times have changed and so has the market
place. That is not a screw job.
What is a screw job is not getting the benefits promised during
retirement when you took lower pay over the course of your career
in order to have security during retirement.
Except now they're bankrupt, so if anyone is going to honor it,
it's going to be the US taxpayer. Are you really sure you want to
reward companies (and labor, and unions) for, in your words,
"gambl[ing] that it would be smarter financially to push those
benefit costs into the future?"
Just because you are anti-union and think the unions screwed the
company over doesn't make it so. Two parties agreed to terms and
signed a contract. If one party felt they were getting screwed then
they shouldn't have agreed to the terms. So obviously both sides
thought the deal was a good deal for them. In hindsight maybe it
wasn't such a good deal, but hindsight is always 20/20.
Now, since the companies don't want to file for bankruptcy and the
government doesn't want that either (something I strongly disagree
with ), nny government monies the auto-companies get should first
go to pay their retirees pension obligations. The company had a
contract and the retirees lived up to their end. Why should the
company get to walk away from their end? Why should the workers get
punished?
If the auto-companies want to file for BK then do that, but until
that happens they are on the hook.
I don't want to reward bad behavior, but the only bad behavior here
is by the companies who want to basically get away with not
delivering what they promised. If government monies do go to the
auto-companies than those monies should be used to make whole the
people who are getting screwed : retirees who lived up to their end
of the contract and have pensions coming to them.
|3.4.09 @ 2:13PM|#
Moynihan is being his typical dishonest self.
Labor costs aren't excessively high. In fact the costs of the
current labor force at US auto companies is withing a dollar or two
per hour of the japanese automakers.
Labor costs for new hires are in line with Japanese
transplants.
Are you disingenuous or just ignorant of the latest UAW
contracts?
|3.4.09 @ 2:46PM|#
Labor costs for new hires are in line with Japanese
transplants.
Are you disingenuous or just ignorant of the latest UAW
contracts?
Your side is being disingenuous.
That $71/hour number includes RETIREES benefits.
You are comparing current and legacy costs of american workers to
only current costs of foreign companies and then saying "look these
guys are getting so much more compensation" -- uhmm maybe over the
lifetime of the company they have gotten more in the past, but
CURRENTLY their labor costs/compensation is the pretty close.
BDB|3.4.09 @ 3:02PM|#
BTW, Nissan is now asking for a loan from not only the Japanese
government, but our own as well.
The transplants are being bailed out now too, folks.
BDB|3.4.09 @ 3:03PM|#
So it's obviously not just labor costs. It's beginning to snowball to the point where just about every major car company is asking for government money, whether from our own, Japan's, or Germany's.
|3.4.09 @ 3:16PM|#
I have to make the most immature irrelevant comment
Did anyone notice how everyone in the frozen first frame of this
video has mean grimaces on their face except for the guy on the
right with the sh!t eating grin?
|3.4.09 @ 3:57PM|#
So it's obviously not just labor costs.
The market has most definitely contracted.
However, by propping up a zombie GM, our government just makes it
more difficult, if not impossible, for *anybody* (Honda, Toyota,
Hyundai, Volkswagen....) to earn their way out of trouble.
LarryA|3.4.09 @ 3:58PM|#
You can argue all you want about the economics. As long as everyone is saying the automakers are a heartbeat from going out of business and voiding any warranty, why in hell would you expect me to buy a new car?
BDB|3.4.09 @ 4:03PM|#
"However, by propping up a zombie GM, our government just makes
it more difficult, if not impossible, for *anybody* (Honda, Toyota,
Hyundai, Volkswagen....) to earn their way out of trouble."
Let it be known that Toyota and Nissan have taken bailout money
before Ford has seen a dime. Just sayin'.
It should be interesting if Bob Corker sticks to his guns on this
or bends over since Nissan has factories and its' North American
headquarters in his home state (TN).
BDB|3.4.09 @ 4:04PM|#
Dick Shelby should be placed on Hack Watch along with Corker if either of them doesn't speak out against the Nissan and Toyota bailouts.
cuernimus|3.4.09 @ 4:12PM|#
Did anyone notice how everyone in the frozen first frame of this video has mean grimaces on their face except for the guy on the right with the sh!t eating grin?
The first frame makes me think the dude on the left gave the dude in the middle an improper touch. The guy on the right is oblivious.
|3.4.09 @ 4:29PM|#
Let it be known that Toyota and Nissan have taken bailout money before Ford has seen a dime. Just sayin'....
Dick Shelby should be placed on Hack Watch along with Corker if either of them doesn't speak out against the Nissan and Toyota bailouts.
Umm, why, BDB? Why exactly should we complain about the Japanese
giving them money? A good portion of that money ends up as direct
subsidy to Americans, gift of the Japanese government and Japanese
people, both as workers and consumers.
OTOH, the other bailouts end up being gifts from the American
people and the American government that go to subsidize not only
Americans but foreigners.
I take it you don't understand trade at all, BDB? Exports are the
price we pay for imports. If another country wants to give us
something for free we take it.
Arguing against our government giving away money is different from
arguing against taking free money from another government.
BDB|3.4.09 @ 4:31PM|#
"Umm, why, BDB? Why exactly should we complain about the
Japanese giving them money? "
Nissan asked our government for a loan just
today.
BDB|3.4.09 @ 4:33PM|#
IOW they're also double-dipping. Nissan is going to get a few billion from the Japanese, and at the same time is asking us for a few billion since they have factories in North America.
|3.4.09 @ 4:33PM|#
As for the legacy costs, the japanese companies don't have as many retired workers here in the US. And back home they have socialized medicine so they wouldn't need to provide health care to their retirees in Japan.
Well, here we have socialized medicine for retirees, yet the UAW
still has that benefit for retirees. The UAW doesn't *need* that
benefit, but they want it because it's particularly nice. So it's
still part of labor costs.
Plus, I'm pretty sure that either business or individual taxes pay
for that socialized medicine. And as a result, either the Japanese
car companies have to pay their workers more to cover those taxes,
or those workers are actually getting less money and the labor
costs are, in fact, lower for current workers and retirees.
Socialized medicine isn't free. It's paid for somehow.
BDB|3.4.09 @ 4:38PM|#
So Nissan is asking for a bailout, from the US treasury. It will be fun to see Sen. Corker's reaction when his state is on the line. Then we'll know if he did this out of principle or if he is just a hack.
|3.4.09 @ 4:53PM|#
I hate the bailouts as much as anyone here, but I've arrived at the conclusion that inertia of the past 80 years of creeping socialism has put us over the edge anyway, but like the wily coyote, we just haven't looked down yet. Might as well bail everybody out, because soon we'll be paying for it in spades regardless of what the government does. Sit back, light up a smoke, take a swig of alcoholic drink of choice, snort some coke, inject some heroin and bang the most expensive whore you can find, because its gonna be one ugly mess when we hit pavement after this freefall.
|3.4.09 @ 6:47PM|#
Here's what they should do. Instead of bailing out GM, you break
GM up into component brands. (Chevy vs. Pontiac vs. Plymoth vs.
Cadillac, etc.)
Then they have to compete against eachother to see which bits can
survive. At the end of five years we have a national referendum and
award $15 billion to the winner.
Meanwhile, we sell the rights to document the competition to FOX
and they make a reality TV program out of it.
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