What do you think of the recent car sales news???

[RiverRat]

I had an opportunity over the weekend to speak with two different sales managers for large domestic car dealerships in Ohio.

They both independently said that the Big Three auto makers will continue to offer different incentives until they can produce cars that can compete with Japanese models. They both said that they hope this happens sooner rather than later.

What was even more telling is that that they both said that about 2/3rds or 66% of their buyers have negative equity (upside down in their loan). The one guy even said that he just wrote a deal for an Explorer where the payment was going to be $680 / month for 5 years.

Crazy

[Ghog]

Another classic american idea: Me first, f**k you.

Where I live, this is much more common than consideration or politeness.

In the past, courtesy was a virtue. Now, its a handicap. At least thats what it feels like when I'm courteous in traffic or at the store, or at any large gathering of Americans.

And I thought the northeast was the worst (I have traveled much of the country). The nicer you are, the more people are out to take advantage of you. My wife startles retail clerks when she smiles and asks how they are doing. Just the other day one clerk said, "You are the first person to smile at me in a very long time". In some ways PO may be a blessing in disguise. "Can't we all just get along" comes to mind.

[rs]

Welcome to the world of the corporation.

Big fat Board members creaming off the profit for themselves and their shareholders.

Like you say, they all have their golden parachutes, the rest of us are left to pick up the pieces. Corporations are the biggest fuck-up of the last 150 years.

[0mar]

I think this is GM tryin to rebuild investor confidence. I remember reading that GM loses like $700 per car that rolls off the assembly line. This new pricing deal is hurting them harder, I think. Unless they've made some huge financial strides, I think this deal is in place to try to rebuild investor confidence.

[gt1370a]

Two weeks later, on marketwatch.com, GM announced a $312 billion loss in the second quarter despite the record sales.

I think you meant $312 million, which is still a lot... they do have about $300 billion in total debt though. Now think about this. As was mentioned in a previous post, anybody who was remotely in the market for a new car would have bought one during this huge discount. What's going to happen next quarter? How long can GM sustain that without going bankrupt? And what will a $300 billion bankruptcy do to the economy? It will make Enron and WorldCom look like nothing. Want to cause some demand destruction and reduce oil consumption? That'll do it.

[Novus]

Things are as nutty as every in the fantasy world that capitalism. There is a large car dealership in my area offering DOUBLE employee discount. The give the GM or Ford discount plus they are giving away the dealership's employee discount. According to the ad they have 200 SUVs that MUST go.

CompUSA is also offering employee discount for their unsold gizmos as well. It won't be long before this type of thing becomes expected. The sooner all this consumer non-sence ends the better.

[gt1370a]

CompUSA is also offering employee discount for their unsold gizmos as well. It won't be long before this type of thing becomes expected. The sooner all this consumer non-sence ends the better.

Yeah, even ARBY'S is offering half-price roast beef sandwiches! Is that the definition of deflation or what?

[cube]

I think this is GM tryin to rebuild investor confidence. I remember reading that GM loses like $700 per car that rolls off the assembly line.
.............

I read somewhere that for all practical purpose car dealerships do not make money selling cars or if they do they make a pittance. The money is in selling you a warranty. For example a 100,000 mile or 200,000 mile warranty. Basically you pay them a set amount of money upfront and they guarantee to fix your car if anything goes wrong. You also send your car every so often for "maintenance" check ups. Car dealerships love this because basically it puts independant auto repair shops out of business and everytime you send your car to get a "maintenance" check up it gives them an opportunity to find something wrong with your car. *cough*

Weelin and dealin

[RiverRat]

At large dealerships, the vast majority of money is made on selling used vehicles and service work.

My cousin is a general manager of a large car dealership. He said point blank that if all they did was sell new cars, they would be out of business in no time flat.

[Trab]

I have a sneaking suspicion that this whole summer sales blowout is more about the big 3 realizing they have a problem and doing whatever they can to move existing product and get it off the car lots and off the books.

I wouldn't be surprised in the least if the production numbers for model year 2006 and beyond are cut way back. Reduced demand means factories that can be closed down, and workers that can be laid off. It's one way to cut costs...

Demand Destruction, anyone?

[AmericanEmpire]

Yeah, even ARBY'S is offering half-price roast beef sandwiches! Is that the definition of deflation or what?

Pretty soon people won't even be able to get a minimum wage job. Once the fast food industry goes under.

[RdSnt]

To paraphrase the ArcheAngel Gabriel, "They are fucked."

[Eli]

Come and get your SUV fast so you can pay 4.00 dollars a gallon to fill it up and drive it to the job you no longer have.

How many vehicles do they sell that get good gas millage?

They are well and truly screwed and they know it. Or I should say we are.

[Ironmike]

I watched an interview with a GM vice-president on Bloomberg the other day when GM announced their earnings for the quarter. He was asked how much the "employee pricing" was affecting his company's bottom line. He stated that their "marketing expenses" were unchanged. This means that this is all a marketing gimmick and they are not selling their vehicles for any less now. They are just selling more of them due to the gullibilty of the car buying public. 1st post I think

[I_Like_Plants]

I'm sure glad I got rid of my SUV, shouldn't have bought it in the first place of course but that's another story.

[Ghog]

I watched an interview with a GM vice-president on Bloomberg the other day when GM announced their earnings for the quarter. He was asked how much the "employee pricing" was affecting his company's bottom line. He stated that their "marketing expenses" were unchanged. This means that this is all a marketing gimmick and they are not selling their vehicles for any less now. They are just selling more of them due to the gullibilty of the car buying public. 1st post I think

It is a tough point to gauge as there are usually incentives on vehicles, especially domestic, like cash back (the public sees) and dealer 'incentives' (public doesn't see) that change the bottom line. I would bet they are taking a hit, just not much different than normal (as of late anyway). It really is a marketing ploy, as they even said recently, they don't want to offer rebates as it cheapens their vehicles' image. Now they are 'rewarding' you with better pricing.

[MD]

GM can only play the "employee discount" card once. They just cashed in on a perception that goes back many years. Around here there has always been an underlying envy for the GM worker that got these wonderful discounts. I can't imagine where GM will come up with the next marketing gimmick.

It's time for cars to go away. The sooner the better. Game over.

[cube]

.........
I can't imagine where GM will come up with the next marketing gimmick.
..............

Buy an SUV and get free high speed comcast internet access for a year!

[jdmartin]

.........
I can't imagine where GM will come up with the next marketing gimmick.
..............

Buy an SUV and get free high speed comcast internet access for a year!

That would certainly make me get out there!

The Big 3 make most of their money from their finance arms. If the finance arms were gone they would be out of business, since the car-making end of things has been marginal or a loser for a while. Ford Motor Credit, GMAC, etc is what is making the money. When banks started getting tougher for people to get car loans (because of the riskiness of someone spending 2 weeks worth of pay on a car payment), the dealers began taking over most of this business.

On paper, it looks like a fantastic idea. Self-finance your really expensive product, charge most people outrageous amounts of interest, and sell most cars for the inflated retail price. You rake in tremendous amounts of cash! The problem with this strategy is that you're not diversified. If people quit buying your product, you're double-screwed. One of the reasons to offer these incentives to get people buying is that they're never really making money from the cars. But, if no one's buying, no one's taking out 6 year loans, either. That can put a serious crimp into lots of things, including your growth prospects, which sinks your stock, meaning lots of bigwigs losing money as their stock options value falls thru the floor.

Really the whole thing is shell games designed to try and prop the system up long enough for "those that are" and a few "those that will be" in charge to get theirs. My father has sold cars almost all his life (Ford for years), and is close to retirement. He tells me 80% or more of the people he sees in the dealership have wrecked credit - chargeoffs, bankruptcies, repo's, etc. The deals he has to try and swing to get people into cars, the stories he tells me, are amazing. People so upside down on 2 or 3 different cars in a row that they're paying 30 grand for a Ford escort (or Focus nowadays). But people really, really want them cars, so the dealership will do it. What can Ford do? If they deny the loan, they're killing themselves off...

[spudbuddy]

Let me see if I'm getting this picture clear:

North Americans love SUV's because they're big and solid and make drivers feel safer. (So was the 1954 Ford Monarch.)
They feel safer because multi-lane highways are clogged with too many big honking vehicles to begin with. (burbs outpacing highway arterial infrastructure.)
All these vehicles are driving way too fast for the conditions of the road (congested).
Add to this an ever-increasing number of gigantic rigs...all driving too damned fast. (Wally's rolling warehouse.) Just in time delivery.
Everyone is driving too damned fast because time is money, which supercedes common sense and safe, defensive driving attitudes.
Holding down 2 or 3 McJobs...chauffering and shopping in between.

Sounds pretty warped to me. The very first thing I thought when I found out about peak oil was...why are SUV's still legal? The second thing I thought was what ever happened to 55 and stay alive?
Why not legislation that demands 50mpg minimum?
Why not legislation that slows down traffic?
I don't know the actual stats...how much gas do you save driving NYC to LA at average 55mph....instead of 85mph?
Wouldn't that cut down fuel consumption by about a third?


I think long before we get to the point of whether we're going to drive or not (based on whatever resources are left to us) we should be seriously considering what we drive, how we drive it, and why.
A car culture will never go cold turkey.
Unless our oil economy just literally falls off the table, some form of a weaning process will be necessary.
The better we wean....well, think about it. Lessens the tendency to suck thumbs, soothers, and other pseudo-mammary replacements.

Sometimes in moments of levity...I try to imagine this picture of people all over the world watching North Americans lurch around in giant guzzlers. Do they think we need these things because we're all 400-pound sedentary couch potatoes? (I'm a string bean myself.)
Do they imagine this is some kind of national fixation on size? (read: all the various porno body parts.) Kind of ironic, isn't it?
Big trucks / big houses / big macs / big boobs / not so little red roosters.
Well - our national psyche always did require four square feet of elbow room!

I don't believe that the changes necessary should be left up to corporate planning, design, marketing campaigns, or any other business venture.
All that's what got us in this mess in the first place.
If the first and last priority is a profit motive, business will always grab the cash now and worry about the consequences later. (read: Enron)

So it follows that stiff legislation, unfortunately, will be necessary to save our butts. From the current administration? I doubt it. Hopefully we survive until the next one.