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Collapse of the auto industry

Discussions about the economic and financial ramifications of PEAK OIL

Re: Collapse of the auto industry

Unread postby JohnDenver » Mon 24 Aug 2009, 10:48:27

Pops wrote:
JohnDenver wrote:However, the fact remains that peak oil (which current figures suggest occurred 4 years ago) has not even come close to destroying the global auto industry.

Oh jeez, it isn't bad enough we've had to listen to Overnight Armageddon is Nigh from a bunch of Rambo Typists for 5 years, now we will also have to put up whatever happened to Overnight Armageddon from the 'Everything is fine, Honey' crowd?

Aren't there any reasonable people here?


Pops, your griping is what is tedious. What I wrote is a straight, unvarnished fact.

I'm certainly not saying "everything is fine, honey". I'm acknowledging that the US auto industry went down the toilet, and asking why that happened when other country's auto industries are thriving or weathering the storm just fine. Please try not to put words in my mouth.
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Re: Collapse of the auto industry

Unread postby Hawkcreek » Mon 24 Aug 2009, 12:21:55

Okay, but I think what you say applies to industry and factory work in all countries. It doesn't provide any information on why Chrysler and GM bit the dust due to peak oil, while virtually all foreign automakers didn't. What's your explanation for that?


I agree with you that American automakers declined much more than foreign makers. I was just offering that it wasn't because of the labor base availability.
I believe it was because of the vehicles being offered for sale. Low mileage, low quality, 4 ton behemoths sold fine when gas was cheap and salaries were relatively high.
The automakers found that they could make 12 K on a big car and only 2 K on a small one, so they effectively stopped offering an inexpensive, high mileage car (even the few high mileage ones available had high price tags just because they knew they could sell them). Never lately have I seen a dependable commuter car at a cost of about 25 % of the average yearly salary of a low wage earner. And yet, this was common in 1969 (the vw beetle- for example)
Recent offerings cost more like 50-100 percent of yearly salary for a low wage earner.
If you check out the prices of cars offered in India or China, I will bet you find most of those sold are about one quarter of the cost of the average car bought in America. Makes it much easier to sell cars when your offerings fit more easily into the salaries of the mass market available.
Bottom line is, in my opinion, is that American companies choose to exercise greed rather than common sense. They choose to "force" the American consumer to purchase a high profit (for the auto-makers) vehicle rather than offer one that fit actual needs.
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Re: Collapse of the auto industry

Unread postby dorlomin » Mon 24 Aug 2009, 12:47:56

JohnDenver wrote:
dorlomin wrote:
JohnDenver wrote:I would argue for another interpretation: the US is a tired superpower whose model is failing, and it is being supplanted by younger, hungrier rivals such as China, India and Islam. This is an age old story, and very similar to how the UK supplanted Spain and the Dutch, or how the US supplanted the UK when their models began to wane, a la Paul Kennedy and The Rise and Fall of the Great Powers.

Nope. I dont think the US is being replaced yet. Certainly not from a millitary perspective.


I think Paul Kennedy would argue that the US has already lost its preeminence because it doesn't have the financial wherewithal to support its military. It has to borrow money to make ends meet and that's a big strategic vulnerability.

There is an inherent assumption in your thinking.
You assume the current US military is the minimum required to hold onto its pre-eminence. The US navy could quite happily be merely its current submarine fleet plus some escort frigates and patrol cutters and still pretty much dominate the world’s oceans. Other services are often as massively overblown compared to needs.

Americas decline is relative and Im deeply unconvinced its ‘rivals’ are anything other than symbiotically dependant on the US.
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Re: Collapse of the auto industry

Unread postby TheDude » Mon 24 Aug 2009, 13:58:25

Hawkcreek wrote:
Okay, but I think what you say applies to industry and factory work in all countries. It doesn't provide any information on why Chrysler and GM bit the dust due to peak oil, while virtually all foreign automakers didn't. What's your explanation for that?


I agree with you that American automakers declined much more than foreign makers. I was just offering that it wasn't because of the labor base availability.
I believe it was because of the vehicles being offered for sale. Low mileage, low quality, 4 ton behemoths sold fine when gas was cheap and salaries were relatively high.
The automakers found that they could make 12 K on a big car and only 2 K on a small one, so they effectively stopped offering an inexpensive, high mileage car (even the few high mileage ones available had high price tags just because they knew they could sell them). Never lately have I seen a dependable commuter car at a cost of about 25 % of the average yearly salary of a low wage earner. And yet, this was common in 1969 (the vw beetle- for example)
Recent offerings cost more like 50-100 percent of yearly salary for a low wage earner.
If you check out the prices of cars offered in India or China, I will bet you find most of those sold are about one quarter of the cost of the average car bought in America. Makes it much easier to sell cars when your offerings fit more easily into the salaries of the mass market available.
Bottom line is, in my opinion, is that American companies choose to exercise greed rather than common sense. They choose to "force" the American consumer to purchase a high profit (for the auto-makers) vehicle rather than offer one that fit actual needs.


Part of the difference is in skimping on things like A/C or safety, I'd imagine. Although the strictly bare bones Nano is being outsold by the "Deluxe" version, I remember reading.

JD wrote:I'm acknowledging that the US auto industry went down the toilet, and asking why that happened when other country's auto industries are thriving or weathering the storm just fine.


Huh? Toyota Bleeds Slower - Forbes.com

Helped by a small rebound in demand in Japan, the world's number one carmaker expects to sell 6.6 million vehicles for the year, 100,000 more than it had recently forecast. That is still around 3 million cars fewer than Toyota ( TM - news - people )'s plants around the world can make.

In the three months ended June 30, Japan's largest company posted a net loss of 78 billion yen ($820 million).

Compared with a year ago, car sales in North America for the quarter collapsed by almost half to 387,000 units. Sales in Japan dipped by 105,000 vehicles to 407,000 in the three months.


They aren't Chapter 11 due to being far less screwed up than the Big 3, for various reasons listed. Even so they've delayed expanding production of Prii, and overall sales are down -34.2% CYTD for July.

What's happening in China is bucking worldwide trends, to say the least, as my first post's link indicates.
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Re: Collapse of the auto industry

Unread postby kjmclark » Mon 24 Aug 2009, 21:25:42

JohnDenver wrote:However, the fact remains that peak oil (which current figures suggest occurred 4 years ago) has not even come close to destroying the global auto industry. In fact, some parts of it are thriving, and the vast majority of it is hanging in there just fine. The only part that seems to have gotten really crushed, are two of the Detroit automakers: GM and Chrysler. How do you explain the differential impact?

Actually, I'm not convinced that the others aren't seriously wounded. Ford, GM and Chrysler all went into this with a product mix heavily tilted toward large truck-based SUVs and almost as big "cross-overs". GM and Chrysler lost sales and profits so fast they couldn't change their business fast enough to compensate.

Ford made a very wise move when Mulally came on board, and mortgaged themselves to the hilt. If their sales don't pick up soon, they may end up in the same boat as GM and Chrysler next year. Luckily for them, the UAW has seen the light, and granted them most of the concessions that they made for the other two. With this, and the extra time Ford borrowed, they may not end up in bankruptcy. It's too early to tell.

As for the rest of the world's automakers, Toyota took losses for the first time in its history, and except for Subaru and maybe Hyundai, everyone else took losses as well. The non-US automakers are more geographically diverse than the US companies (though GM is supposedly doing quite well in China), and less tied to the SUVs and full-sized trucks that the US makers earn their profits on. When the sales of pickups for the construction industry, and SUVs for the heavily endebted middle-class, tanked over the past few years, the foreign automakers did well for a few more years on sales of their smaller vehicles.

I think it's too early to tell what's going to happen to the industry. Oil prices are already headed back up strongly, on little more than rumors of economic growth.
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Re: Collapse of the auto industry

Unread postby Tanada » Tue 14 Jun 2016, 10:29:20

Detroit's auto reports are convinced this cheap oil fueled sales boom will go on another two years before the inevitable slowdown.

The Detroit News wrote:The auto industry's good times have about two more years to roll and annual sales are expected to top 20 million by 2018, according to Bank of America Merrill Lynch's annual industry outlook.

General Motors, Ford and Honda are all well positioned to take advantage of the record sales, with robust product plans that should lead to market-share gains over the next four years.

The rosy forecast and future product plans of each major automaker were outlined Wednesday by John Murphy, an analyst for Bank of America Merrill Lynch, who presented the company's annual "Car Wars" study.

The report is closely watched because automakers go to great lengths to keep their future product plans under wraps. But Murphy's exhaustive report often sheds light on specific product plans as he assesses the strengths and weaknesses of each automaker.

Murphy said automakers, flush with cash from increasing industry sales, will launch about 58 new cars and trucks on average over the next four years — a sharp increase from the industry's historical average of 38 vehicles per year.

In his blunt assessments, Murphy concluded that "Nissan seems to be lost," Honda has a consistent, simple product plan and Fiat Chrysler Automobiles has "a great plan, but can they fund this?"

When it comes to total industry sales, Murphy said he is confident the industry will be selling more than 20 million vehicles annually by 2018 — eclipsing the record of 17.5 million last year.

He cited solid, but not great, consumer confidence and strong, steady job growth since the Great Recession of 2008 and 2009, plus a sharp spike in the total miles driven by Americans.

"When you think about the people who are likely to buy new vehicles in any given year, you're talking about 5% to 6% of the population," Murphy said Thursday when he spoke to the Automotive Press Association in Detroit. "They are fairly affluent, well educated and tend to be more confident about the future."

Murphy's outlook is much more optimistic than most of his Wall Street peers, who have led many large investors to steer clear of traditional auto stocks on the basis that the North American market is at or near a cyclical peak, while uncertainty in China and South America present other risks.

Murphy also dismisses the impact that the rise of ride-sharing companies such as Uber, Lyft and others will have on the industry, as well as the evolution towards self-driving vehicles.

"The fact of the matter is, demand for getting from A to B is up and is up dramatically," Murphy said.

So when will this historically cyclical industry see its next slowdown?

"Sometime in the next three to five years," Murphy said

http://www.redding.com/news/379658841.xhtml
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Re: Collapse of the auto industry

Unread postby ennui2 » Tue 14 Jun 2016, 15:59:43

pstarr wrote:according to this data from Zerohedge


That phrase is an automatic fail right there.

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Re: Collapse of the auto industry

Unread postby Tanada » Tue 14 Jun 2016, 16:14:13

Not to take sides in your endless grudge match, but anything I see on zerohedge I track back to the original source and post from the original, not from zerohedges interpretations and reading between the lines articles themselves.

Yes it is a little more work, but I would rather start at the root and build my own conclusions.
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Re: Collapse of the auto industry

Unread postby AdamB » Tue 14 Jun 2016, 18:59:48

pstarr wrote:
The Detroit News wrote:The auto industry's good times have about two more years to roll

Not necessarily, according to this data from Zerohedge GM/Ford sales collapse and inventory climb are at a new high.
Image
Image


Great graphs. Looks like it might be the time to go get a car, taking advantage of the manufacturers need to clear inventory.
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Re: Collapse of the auto industry

Unread postby Outcast_Searcher » Tue 14 Jun 2016, 20:20:30

Tanada wrote:Not to take sides in your endless grudge match, but anything I see on zerohedge I track back to the original source and post from the original, not from zerohedges interpretations and reading between the lines articles themselves.

Yes it is a little more work, but I would rather start at the root and build my own conclusions.

Tanada, I think you're on the right track there. I actually noticed a fairly sane ZH article on the Puerto Rico debt crisis a couple/few days back. It didn't even seem to spin the source story. (I was confused for a bit).

Of course, from ZH, any story talking about a crisis is their meat and potatoes, so no spin really needed (unless the target story calms down).
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: Collapse of the auto industry

Unread postby ennui2 » Wed 15 Jun 2016, 09:22:57

pstarr wrote:Have things changed that much since January?


Apparently you refuse to read this thread.

The problem with doomers in general is they interpret every down-tick in a chart as the onset of a one-way "collapse". Then when charts tick upwards they don't even seem to acknowledge it. Tunnel-vision and selective-memory.
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Re: Collapse of the auto industry

Unread postby yellowcanoe » Wed 15 Jun 2016, 12:41:22

ennui2 wrote:
The problem with doomers in general is they interpret every down-tick in a chart as the onset of a one-way "collapse". Then when charts tick upwards they don't even seem to acknowledge it. Tunnel-vision and selective-memory.


Yes, there is some truth to that! I thought we were hitting world peak oil in 2008 and eight years later we still aren't there.
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Re: Collapse of the auto industry

Unread postby AdamB » Wed 15 Jun 2016, 21:00:10

yellowcanoe wrote:
ennui2 wrote:
The problem with doomers in general is they interpret every down-tick in a chart as the onset of a one-way "collapse". Then when charts tick upwards they don't even seem to acknowledge it. Tunnel-vision and selective-memory.


Yes, there is some truth to that! I thought we were hitting world peak oil in 2008 and eight years later we still aren't there.


Same here. Thought it had happened in 1990 when Colin said it would. Quarter century later, still not there. And now? People say it doesn't matter because we won't want the stuff any more!! How crazy is THAT!! Now we'll have to dream up some other stuff! House as ATM? Could work again. Global currency values? China could unleash their dollar reserves I suppose. Cosmic collisions? Always a good backup. Hot weather as opposed to cold weather? Sure...people have the memory span of goldfish, they can always be convinced one or the other is happening. Sea level keeps rising like it has since the covered the Bering land bridge? Absolutely! Doesn't matter why does it? Anything will do, as long as we can testify!!

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Re: Collapse of the auto industry

Unread postby ralfy » Wed 15 Jun 2016, 23:01:12

The effects of peak oil take place even before world production reaches a peak.
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Re: Collapse of the auto industry

Unread postby AdamB » Wed 15 Jun 2016, 23:55:08

ralfy wrote:The effects of peak oil take place even before world production reaches a peak.


Dude, seriously? Do you mean the 1979 global peak, that explains why the 1970's sucked? Or the one Colin claimed in 1990, that was why the 1980's sucked? And the one that some claimed happened in 2000, that was why the 1990's sucked? And the one in 2008, that was why the 2000's sucked? And the one in 2015, that was why post 2008 sucked?

Sounds like all of us grew up in the runup to one peak oil or another, and yet...iphones still got invented, real gasoline prices right now are about the early to mid 1970's level, the US has become a swing producer again because of its ability to generate the sine wave of oil production profile, and if the rest of the world does it as well......yikes! What will peak oilers do except play kick the can? Again?

Did you know that peak oil was so bad this last time that it had to be redefined as higher production and lower prices because....that is what HAPPENED?
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Re: Collapse of the auto industry

Unread postby Shaved Monkey » Thu 16 Jun 2016, 07:22:11

Auto manufacturing totally closes down in Australia next 2 years.
Ford GM(Holden) and Toyota, Nissan closed down over a decade ago.
Australians stopped making cars Australians wanted to buy and the conservative government would rather pay dole cheques than subsidies to the auto industry.
It seems we either have tonnes of money and want the luxury of a Mercedes or we want Toyota Corollas and we dont mind Toyota SUVs

Confidential industry figures for the full year in 2015 show Ford posted its worst result in 49 years while Holden’s tally was the lowest in 22 years.


A sign of our changing buyer tastes, the Ford Falcon, having posted fewer than 6000 sales for the year, was comfortably outsold by the Mercedes-Benz C-Class luxury sedan.

Toyota was the overall market leader for the 13th year in a row, ahead of Mazda, while the Toyota Corolla was our favourite car for the third consecutive year.

http://www.news.com.au/technology/innov ... c9e0a4d87a
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Re: Collapse of the auto industry

Unread postby Tanada » Thu 16 Jun 2016, 08:42:55

Shaved Monkey wrote:Auto manufacturing totally closes down in Australia next 2 years.
Ford GM(Holden) and Toyota, Nissan closed down over a decade ago.
Australians stopped making cars Australians wanted to buy and the conservative government would rather pay dole cheques than subsidies to the auto industry.
It seems we either have tonnes of money and want the luxury of a Mercedes or we want Toyota Corollas and we dont mind Toyota SUVs

Confidential industry figures for the full year in 2015 show Ford posted its worst result in 49 years while Holden’s tally was the lowest in 22 years.


A sign of our changing buyer tastes, the Ford Falcon, having posted fewer than 6000 sales for the year, was comfortably outsold by the Mercedes-Benz C-Class luxury sedan.

Toyota was the overall market leader for the 13th year in a row, ahead of Mazda, while the Toyota Corolla was our favourite car for the third consecutive year.

http://www.news.com.au/technology/innov ... c9e0a4d87a


It is just very strange to me that a country that built its own defense aircraft in WW II is willing to just let its entire manufacturing capacity go away without doing anything to change the trajectory. No manufacturing will make Australia totally dependent on other countries for manufactured goods, how hard is that to understand?
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Re: Collapse of the auto industry

Unread postby Newfie » Thu 16 Jun 2016, 12:47:59

Like Saudi Arabia having no farms?

I keep saying, collectively we are really pretty stupid.
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