J.D. Power warns global auto market may "outright collapse" in 2009
J.D. Power and Associates, the influential industry tracking firm, warned that the global auto market may "outright collapse" due to the lack of available credit and the general global economic conditions in 2009. According to the company, credit market restructuring, fewer leasing options, and declining owner equity are adding additional stress to an already burdened market. Don't turn to the automotive markets in China, Europe, or India either -- they are expected to slow next year as well. Much of the domestic sales decline is attributed to consumers delaying vehicle purchases (their studies indicate people are keeping their vehicles four months longer in 2008, compared to 2007). Other contributing factors are the drop in leasing activity, and the loss of fleet sales (down to 2.8 million from 3.3 million last year). While the automotive sales decline over the summer made this a buyer's market, willing consumers who venture into showrooms today are finding dealerships eager to sell, but banks aversive about lending.
[Source: Automotive News, subs. req'd]
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Reader Comments (Page 1 of 2)
Michael 4:37PM (10/10/2008)
This should work out well for me. I'm going to, in a few months, be: (1) trading in a car lots of people want (Honda Fit), (2) buying a car not too many people want, and (3) paying cash.
Bazam.
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The Luigiian 4:45PM (10/10/2008)
They may want your car but if they can't afford to buy it your economic position may not be as good as you think it is.
IOW, if the entire auto market completely collapses, it means there may not even be anybody looking for your car. You've got a better chance than a guy selling his F-150, but there's just not a lot of people looking at cars at all right now.
Michael 4:47PM (10/10/2008)
Heh, yeah, I suppose that's true. Still, things could be worse.
TJ 4:38PM (10/10/2008)
You mean to tell me that 7 years and counting of the media screaming day in and day out that the sky is falling had an eventual effect on consumer confidence and spending?
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Nick 4:40PM (10/10/2008)
And thanks to this largely opinion-based article by JD Power & Associates, the stocks tumbled and my 401k took another hit. Thanks guys!
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Amien 4:41PM (10/10/2008)
The auto market MAY collapse? Really? No sh*t!
J.D. Power MAY be Captain Obvious personified.
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Josiah 4:50PM (10/10/2008)
Just like the airline industry collapsed after 9/11 right?
Oh wait, we still need to fly (and drive) places.
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Nick 7:18PM (10/10/2008)
You're absolutely right. A number of U.S. airlines have shut down since then, and the remaining ones have come close to bankruptcy and are weighed down by massive debt.
tekd 12:15AM (10/11/2008)
You realize half our airports are about to go bankrupt since the airlines have cut flights to them right? And the airlines themselves are so desperate they're charging people to check even their first piece of luggage now and charging for cookies to try and offset the massive amount of money they're losing?
And you do realize that this is already after a bunch of airlines went bankrupt and reorganized...right?
jgp 4:51PM (10/10/2008)
I'm glad I'm mostly interested in used cars.
It's cheaper to buy an $8k used car than a $25k new car, and the former will probably be a better car.
Once I get my next raise, I'm going to be tracking down and buying a 1990-93 Infiniti Q45. I bet I can get one for cheaper than a new Nissan Versa, and I don't even have to say how much of a better car the Q is.
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Frat Stud 5:04PM (10/10/2008)
"It's cheaper to buy an $8k used car than a $25k new car"
Thanks for the blazing economic insight there, mate. I'm going to have Hank Paulson call you to discuss ways to turn the economy around.
justin 5:09PM (10/10/2008)
I hope you mean 2001-03 q45, or you are getting ripped off "my friend"
nataku83 5:10PM (10/10/2008)
Um, you could probably buy 2-4 (depending on condition) 1990-1993 Q45s for less than a new Versa.
Christian de Saint Preux 1:13AM (10/11/2008)
That is if you have the $ then and there and/or the PENFED.org can lend you the money... Otherwise.. a used car interest is extremely higher and your payment will likely be almost the same as teh new car ...
John P. 4:55PM (10/10/2008)
It's going to collapse? uhuh. Like in 30 years we'll be driving around in old late 20th century cars and a couple early 21st century cars, keeping them held together with chicken wire and duct tape?
Nice to see Obama has a guy working over at JD Powers too? Nice.
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A.N.E. 5:02PM (10/10/2008)
J.D. Powers will then be surveying refrigerator quality. Hahaha!
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J M C 3 5:14PM (10/10/2008)
Well maybe it'll cut down on the greenhouse effect(resignation).
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Colin Smith 5:27PM (10/10/2008)
There are still over 13 million cars a year being sold in America: somebody has to make them.
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John Nicholas 5:43PM (10/10/2008)
One aspect never covered in these "industry collapse" stories is that after a few collapse the remaining players are stronger. It's impossible for all the car manufacturers / airlines / whatever to fail because eventually there is an equilibrium point where the survivors are profitible
There may be some big shakeups in how things are done. I would think it was more likely that this would be the end of dealerships to be replaced by smaller company owned stores.
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nmt 6:17PM (10/10/2008)
Yeah, that's a really good point. If current dealers borrow money to buy their inventory and count on turning it over fast enough to pay off the loan, they will probably go out of business eventually.
However car companies have already made the investment in producing the car and own it without a loan directly. Maybe they will buy out the current dealers for pennies on the dollar as they go out of business and run company owned stores.