Filed under: Car Buying, Plants/Manufacturing, Earnings/Financials
U.S. car sales in the doldrums to infinity until 2012 and beyond
There were about three million fewer cars sold in 2008 than 2007. Based on 2007's numbers, it would be the same as if Acura, Audi, BMW, Chrysler, Dodge, Jeep, Lexus, MINI, Porsche, and Saab all closed their doors in 2008. In terms of pure automotive carnage, that's not the kind of damage you can just buff out. And the predictions for the future agree on two points: it's going to get worse, and it won't return to what it was for years to come.The only difference in the predictions of gloom is exactly how long things are going to stay depressed. Everyone agrees that the vertiginous sales drop in Q4 of 2008 is going to continue at least until the middle of 2009. Some, though, think that 2009 will "look a lot like 2008, but in reverse," with a slight sales rebound possible in the latter half. That prediction depends on the size of the proposed economic stimulus package, and whether it actually stimulates the economy. After all, banks received their own stimulus packages, yet getting a loan is as hard as ever.
Others say we are "entering a prolonged period of conservation." One analyst predicts that U.S. car sales won't see the north side of 15 million in annual sales until "2012 or later," while another said that we won't see 16 million annual sales again "for the forseeable future." Naturally, with such conservation comes other cuts, like R&D budgets and model facelifts, that could mean the cars on offer won't be as interesting or as cutting edge as before. While that could be looked at as a benefit, saving manufacturers the need to put new redesigned cars in showrooms every three years, the necessary auto industry infrastructure changes (plant closers, layoffs, etc.), the certain extinction of some companies, and the uncertain future are going to hurt.
[Source: IHT]
Reader Comments (Page 1 of 3)
Hugh G 5:42PM (1/07/2009)
I just bought a new car last week. A Mazda. I had no trouble getting a car loan. It took about 30 minutes in their little finance office and I was done. Of course, I have a FICO score of 857 so maybe that helped.
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jb 6:21PM (1/07/2009)
"A FICO score is between 300 and 850"...
Randy 8:56PM (1/07/2009)
I just burst out laughing at the reply! Then I researched it real quick and laughed even louder because it's true!
Sorry, but it was funny!
Judy Zik 10:59PM (1/07/2009)
Wow! With credit like that you can buy a Mazda 6.5!
Jj 5:42PM (1/07/2009)
On the plus side: in 30 years desirable models from this period will be espicially rare and valuable.
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Mobius_1 6:03PM (1/07/2009)
I don't suppose anything would ever come close to feeling as good as burning the last drop of petrol in 40 years time in a ZR1. :)
Jj 6:18PM (1/07/2009)
That just got me to thinking. Could you imagine finding a rough old Nissan GTR in some barn in 40 years? It would not be like getting an 50's Studebaker running again. You would have a lot of specialized knowledge of a complicated but obsolete electrical and computer system. Makes you wonder what the whole classic car hobby will be like then. I think as cars get more advanced old cars that still run will become more and more rare.
Totally off topic, Sorry.
firstplace 5:51PM (1/07/2009)
maybe ford will still be around, if we are lucky gm, buy buy chrysler.
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Tim 5:51PM (1/07/2009)
One thing I've been thinking about lately is what's going to happen to all the cars sitting unsold in Long Beach and other ports. It's going to be some time before those cars even make it to dealers, much less into the hands of owners.
Toyota announced they are stopping production in Japan for a total of 11 days, so far, in the coming months. If things continue as they are I don't see how that doesn't get extended and other foreign carmakers follow suit.
What if we wind up with a significantly abbreviated 2009 or 2010 model year just so they can sell all the '08's clogging the pipeline.
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Conundrum 7:42PM (1/07/2009)
I believe some manufactures actually have a reduced inventory this year vs. the same period last year. Toyota likely isn't one of them.
Some great deals could be just around the corner on some fine Toyotas.
dcwf 5:52PM (1/07/2009)
Interesting. The US population is about 300,000,000, 75% of whom are of driving age. At 15 million new cars per year, each of us can get a new car every 15 years or so, on average. I better get an oil change.
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Vincenzo 5:56PM (1/07/2009)
I don't understand the point about the R&D cuts.
The car manufacturers must invest heavily into R&D.
If there are fewer buyers with money, manufacturers have to seduce them offering better than competitors products.
If I don't see a car that I would like to buy, I'll keep waiting.
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Jake 6:05PM (1/07/2009)
Yeah, what were the analysts saying a year or two ago?
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Rob the SVX guy 6:36PM (1/07/2009)
It's been a long time coming. GOOD.
Modern cars, REMOTELY modern cars, are capable of running 200,000 miles with VERY minimal maintenance, and much longer with BASIC maintenance. My 89 Accord has 273 THOUSAND miles, and just started giving me trouble, because it has a CARB. If it was EFI, I'm sure it'd be good for another 200,000. I've replaced the waterpump, timing belt, struts, springs, bushings, exhaust, and brakes, but that's it. It does not burn oil, it does not leak, and when warmer out, it runs fine. My point is that FAR FAR FAR FAR FAR too many people treat cars very poorly, then sell them instead of fixing them. This has to stop. I don't care what MPG your stupid hybrid gets, it is NOT better for the earth to buy new cars all the time.
Here is the TRUTH about hybrids, SUVs, or ANY new car: The amount of pollution created for each STANDARD vehicle is insane. Thousands of people, all over the globe, extracting raw materials, refining them, shipping them, designing them, testing them, forming them, assembling them, gluing them, painting them... it's all a gigantic sham of consumerism. Cars LAST A VERY LONG TIME. My other cars all have over 150,000 miles, I have a Subaru with 197,000, a Prelude with 160, and an Acura with 155k. ALL DRIVE GREAT.
Watch this video.
http://www.youtube.com/watch?v=ooN9INJxxy4&feature=channel_page
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Raffi 7:02PM (1/07/2009)
Well not everyone is a cheapskate or anti-consumerist. Most people have no desire to run a car into the ground before getting a new one. You get a new car for the improved safety, styling, comfort, peformance, or to meet changing needs (family, etc).
Rob the SVX guy 7:14PM (1/07/2009)
That's because most people are fickle idiots who are too lazy to properly care for anything, and just want to throw it away and get something new and shiny. And it's not being a cheapskate or anti consumerist, it's called BEING EFFICIENT. And green. Want better handling? Modify your car with better struts, springs, bigger swaybars, and bushings. Want to be safer? Drive safer. Need a bigger car? Buy a different used car. There is ZERO need to buy a new car, especially considering the huge financial hit you take over the first few years of ownership. It's stupid.
Jj 7:29PM (1/07/2009)
Well, SOMEONE has to buy new cars or eventually there will be no used cars left to buy.
You have some good points except for the zero need for new cars part.
Mike 8:07PM (1/07/2009)
As long as people have enough money, they will not be sticking their wives or children behind the wheel of some old POS that could break down at any time. Sure most cars these days last 150,000 miles with no major problems but for many people, the cost and time required to upkeep an old car isn't worth it.
I assume you're still in or just out of school. Try coming back in 10-15 years when you work through the entire day, past the time a repair shop is open and try to tell me how you're going to deal with repairing your vehicle twice a month. You gonna call in sick and fix it in your garage or show up late to work to get it to a shop? What if it breaks down on you on the way to work or your wife breaks down dropping the kids off at school? Now you have to deal with it or at least instruct her on where to go to get it towed and/or fixed.
Not to mention that 99 out of 100 people couldn't change a frickin tire without AAA, so they are now going to learn enough about their car to maintain it themselves or pay someone to fix it all the time?
Reality sucks and I do agree that it has gotten out of control when people are upside down on payments because they have to have the newest car every year, but the truth is that at about 8-10 years, if you don't want hastle, you'll be trading your car in. As someone else pointed out, at 15 mil cars a year, the average driver would only be trading in every 15 years.
Eddie 8:45PM (1/07/2009)
I work hard, and in return I like to buy a new car every 3 years. There's nothing wrong with that. It stimulates the economy, plus I get a new car that I enjoy. Someone else buys my old, well maintained car, at a heavy discount. Everyone wins.
Kevin White 9:09PM (1/07/2009)
I bought my first new car two years ago and the peace of mind of having something I know is not going to break down and that I have babied and maintained perfectly is a great thing. I'd love to keep it for ten years. They key to that for me is not driving it much. Right now I'm at 11,000 miles which means I'm putting about 5300 miles per year on it. I'm hoping to move into a new position at work which will mean only commuting two days per week, so I should be able to drop to about 3700 miles per year. So at ten years I would want to be at 40,000 to 45,000 miles on the car. Maybe I could keep it for twelve years/50,000 miles. If I kept it until it had 273,000 miles, at these rates of mileage, it would last, what, 73 years??
If I drove enough to have over 200,000 miles in some reasonable number of years, first of all I'd move my residence or my company so I didn't bash in my own skull dealing with a long commute. But second of all I'd probably want to trade it in after six to eight years. Mike has a great point about the real costs of repairs. I do not have the time to worry about the car not starting or not making it to my destination. In that sense, I look at my new car as an INVESTMENT (fully paid for, btw). I know that it's a depreciating asset with required expenses, but getting a new, reliable vehicle to replace a long string of used vehicles with their accompanying doubts and problems was key for me. I no longer worry about not being able to show up for work or to meet my girlfriend or family or being stranded somewhere or having to pay unexpected repair expenses and press my luck with time out of work, etc.
Peace of mind and reliability is worth paying for. And like I said, two years, 11,000 miles...