Auto sales stagnate in September
Be careful what you compare things to.
If you compare U.S. auto sales in September 2010 to the horrendous sales of September 2009, the industry looks like it’s roaring ahead.
If you compare sales for September 2010 to those from a recovering August, the industry is barely inching ahead.
For example, Ford Motor (F) showed a 46% year-to-year jump in sales.
Super, right?
But Ford showed just a 2% increase in sales from August 2010.
The story was the same for Chrysler Group—up 61% from September 2009 but just 1% ahead of August 2010.
And the effect wasn’t limited to U.S automakers either. Read more
Can China’s auto market save GM? Do pigs fly?
So what do you do if you’re a car maker with a home market that’s not buying as many cars as it used to?
If you’re General Motors (GM), you invest as fast as you can in making and selling cars in China.
Great plan.
So great that Toyota (TM), and Nissan, and Volkswagen (VLKAY), and BMW (BAMXF), and Honda (HMC) and Hyundai (HYMLY) have all adopted the same plan.
The result is a capital spending spree so large, and resulting new manufacturing capacity so great, that it could be the cause of the next collapse and shake out in the global auto industry. And the best guess is that this shakeout could arrive as early as 2015. That’s long before companies such as General Motors that are still working to emerge from bankruptcy or companies such as Toyota that are struggling to rebuild profitability have put away cash for a rainy day.
The collapse is likely to be even more brutal than that of the U.S. car industry in the recent recession. (The auto industry story is just an extreme version of what I’ve called the danger of a profitless economic recovery. For more on what that means across the global economy, see my post http://jubakpicks.com/2010/01/19/get-your-portfolio-ready-for-the-profitless-global-economic-recovery/ )
I don’t think there’s any way that the auto industry can avoid this collapse. The logic behind expanding in China is just too irresistible. Read more
What GM’s ads don’t say: Taxpayers will take a loss on this bailout
So what about the rest of our money?
Today General Motors is running ads patting itself on the back for repaying its taxpayer loans.
“We’re proud to announce: We’ve repaid our government loan. In full. With interest. Five years ahead of the original schedule.”
Absolutely true. As far as it goes. Read more
February auto sales disappoint but no reason for panic
You can come up with lots of reasons why investors shouldn’t panic at the slide in February U.S. auto sales to a seasonally adjusted annual rate of 10.4 million. That was down from the seasonally adjusted 10.8 million sales rate in January 2010 although up from the 9.2 million rate of February 2009.
Snow storms. Troubles and more troubles at Toyota. A big drop in sales from brands such as Saturn, Pontiac, Hummer, and Saab that General Motors (GM) has decided to discontinue.
All those cut in February sales and make hard to argue that the recovery in the auto industry has stalled.
But the numbers aren’t a rousing endorsement of pedal to the metal growth either. Read more
Could the auto industry actually be on the mend? October’s numbers say Yes.
U.S. auto sales ran at an annualized rate of 10.5 million in October.
That may not impress you if you remember that annual U.S.auto sales ran at 16 million units for nine straight years ending in 2007. That string came to an end in 2008 when auto sales ran at a 13.2 million units. The forecast for 2009 is an even grimmer 10 million units.
But the October’s number is a huge piece of good news if you are looking for signs that the U.S. recovery from recession is actually going to produce real growth. Read more
