Why aren't new cars selling? Is the car the problem?


#1

The issue behind the lack of car sales is not about the quality of the car. Foreign or domestic, neither is selling. Large and small, even hybrids are not selling. Bailing out the car companies is not going to sell cars either. The issue is in the money, and I don’t mean willingness of banks to make loans. People don’t have the “easy” money that we all grew to expect - the appreciated value of our homes. Cars and much of the American lifestyle over the last 15 years was not based on salary increases, better jobs, and upward mobility. Americans lived off their houses, or the appreciated value of their homes. Take that money out of the equation and new cars become too expensive. This is making used cars the choice at the moment for anyone whose car has to replaced. The rest of us are putting money into repairs to keep the cars we have going longer, or deferring repairs and hoping the old car keeps going out of its will to survive. The housing appreciation money is gone and if it ever returns it will be years perhaps decades away. Car makers need to adjust to the reality that their prices are not going to fly anymore. This means less luxury add ons and guess where the profits are? You got it the luxury add ons! Once upon a time there were lots of small auto companies. When they failed some disappeared some merged (GM) and some were lucky enough to survive. Perhaps the old model of making and selling cars simply can’t be saved given the new reality of people having to buy based on their salaries. Detroit’s method over the years it to build as few engine types and transmissions as they could and make keep making the same motor (block, pistons, heads) for years and years. Therefore, new technology was only used when it could be adapted or applied to existing motors. The foreign car makers are newer and didn’t try so hard to keep using a motor designed in the 50’s and they surged ahead of Americian car companies as a result. The size and infastructure of the American car company that worked so well in the 50’s and 60’s became the “baggage” that held them back in the 80’ and '90’s. Now American cars are pretty good again, but they are not a good fit for the market anymore. The changes in the marketplace are so profound that it may not be possible for the large American auto company to shift gears quick enough to survive - no matter how much money our government forks over. Look at Hundai, they will buy back your car if you lose your job, they are selling cars. Subaru is a small company and they are making small, AWD, affordable cars, they are selling. If Ford can sell a Fusion Hybrid for $14,000 and make a profit they will sell cars. But the new Fusion Hybrid is going to sell for about $30K because they well load it with SYNC, 6 CD players, auto temp control, and leather seats. Great car that only a few will be able to afford. GM can’t sell their Hybrid Tahoes and they are offering $10,000 discounts, but that still makes it a $40,000 vehicle. Here’s what will sell a full size Chevy pick up for $15,000 with a decent motor and a fuel efficient 6 speed tranny. It may have little more than AC, PS, PB and a radio but it would sell. Luxury cars are no longer for the masses, car companies must realize that their customers now have to live within their means and our “home equity” isn’t there to tap into anymore. In a few months more people will have to replace a car that is simply worn out or needs more repairs than it is worth. When they head to the showroom will they find a functional car at a price they can afford? There is opportunity here for a company that is willing to break the mould. Will the American car companies continue to “load” up cars with options people can’t afford, or make a basic car that is attractive, functional, efficient, and affordable. It will mean less profit for car, but a market share mentality is needed now to keep sales volume high at the expense of profit per car.


#2

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#3

I remember well the “Eisenhower” recession of 1957-58. New cars weren’t selling, and the auto workers were laid off. The Edsel came and went. However, the AMC Rambler did sell and AMC even revived the tooling for a car made much earlier, produced the car and called it the Rambler American. Studebaker stripped its Champion of all the chrome and any other item that was non functional and called the car a Studebaker Scotsman. This car kept Studebaker afloat until it produced the Studebaker Lark (actually a shortened version of the sedan models that appeared in 1953) and Studebaker actually turned a product. Both Studebaker and American motors produced serviceable cars that people could afford in this time period, and the stock in these companies went way up on the New York Stock Exchange.


#4

The car company that streams line there car manufacturing with all the desirable options at a value price will be the winner.

This market will NOT tolerate HORRIBLE BS Marketing, such as bundling stability control with GPS, it is just plain ridicules to bundling safety features with bells and whistles.


#5
A few paragraph breaks would have been nice.  I just can't bring myself to try and read the OP.

#6

It’s The President! He’s Telling Everybody We’re Going To Hell In A Handbasket!

People are saving like never before. They’re afraid. We need positive leadership.
Even Bill Clinton told him to lighten up. This guy, with his spending and social engineering and talk of a climate crisis, economy crisis, everything crisis, is scaring the hell out of me.

It’s not the supposed crises that are scaring me, it’s our loose canon president. I could afford to cash out on 2 new cars, but I’m not spending until I see where we’re going with taxes, spending, socialism, climate, our military, and this guy scaring the crap out of Wall Street.


#7

Wasn’t the current crisis well under way long before the January inauguration?


#8

It’s Not The Crisis. It’s About A Leader Who’s Deepening It , Not Leading Us Out Of It.

I bought one car in November, under optimistic leadership!

Where are we going? Just take a look at California with environmental wackos, out of control regulation, out of control spending, out of control taxes, and a Governator asleep at the wheel.


#9

“I bought one car in November, under optimistic leadership!”

How about listing all of the other things that you liked about our former chief executive?
I can hardly wait!

Incidentally, Herbert Hoover was also optimistic about the failing economy when he was president. You know–“Prosperity is just around the corner”.
Ha!
Yes, he was optimistic, but he was not willing to do anything to pull the economy out of its tailspin. His optimism did not put food on people’s tables, unfortunately. Yes, history does repeat itself.

As to why cars are not selling in the US, it is the same reason why cars are not selling in foreign countries. A huge number of people have already lost their jobs and IIRC, people are continuing to lose jobs at the rate of about 10,000 people per month in the US. Those who are still employed realize that their companies are still looking for ways to downsize, and they are worried that their job will be the next one eliminated by their employer.

If a large number of people are unemployed and an even larger number look at the empty desks in their workplace and fear that their job will be the next to go, it would be either impossible or unwise for them to spend thousands of dollars on a new car. And then there is that pesky issue of banks not wanting to lend money to those who might be inclined to take out a car loan.

Put all of this together, and you have the reason for the massive downturn in car sales in every country around the world. No matter what someone may think of our new president, he is the president of only the USA, and his policies–either stated or enacted–have no impact on consumer behavior in other countries.

If you would like to see graphic evidence of the massive number of cars sitting in manufacturer’s storage lots all over the world, take a look at this gallery of 12 photos from The Guardian newspaper of the UK:
http://www.guardian.co.uk/business/gallery/2009/jan/16/unsold-cars?picture=341883529


#10

The U.S. Economy Is Helping To Drag Down The World Economy.

Working people in a capitalist country drive the economy, not the Government or President. Give workers some encouragement and get the government and its regulations out of our way. Our excessive government spending will lead to run-away inflation, prolonging our hardship.

“How about listing all of the other things that you liked about our former chief executive?” We would never agree on things that I liked about our former president. I’m not thrilled about many things the government has done in the past 8 years, anyhow.

Here are a couple of examples of the lack of confidence in our present leadership driving down our economy.

http://www.boston.com/news/nation/articles/2009/02/21/bill_clinton_offers_advice_on_optimism/?rss_id=Boston.com+--+National+news


#11

“How about listing all of the other things that you liked about our former chief executive?”

President Bush believed that his first priority was to prevent new attacks on American soil. He accomplished that goal. President Bush also made some mistakes; big ones that he will be remembered for always. President Obama will also make mistakes. CSA makes a good point about Obama being too glum. FDR also acknowledged the problems during the depression, but was also the nation’s biggest cheer leader. We could use a bit more of that.


#12

This is what happens when the people elect a President who insists on telling the truth. For such a long time we have had either a horny redneck liar and then a stupid redneck liar that it seems you have come to depend on the lies, but I am grateful to have a President who calls it as he sees it.

What you call a “loose canon president” I call an honest man. What you call “optimistic leadership” I call a liar.

Your defense of lies and your creative use of euphemisms leads me to believe that even if Bush had destroyed the USA, but he continued to tell us nothing was wrong, you would be perfectly happy to conduct business as usual.

Your unfortunate desire to be lied to is an untenable position. However, if you want a captain who tells you everything is fine while the ship is sinking, I am sure there are plenty of countries around the world that have leaders who will lie to you and make you feel like Bush is back in office.


#13

“get the government and its regulations out of our way”

Yup! The deregulation actions of the preceding 10 years worked out really well, didn’t they?


#14
  1. fear of losing jobs
  2. Upside down on present loans.
  3. All cars are designed on the same wind tunnels, thus all late model cars look alike.
  4. Cars no longer rust out.
  5. Power trains last 200,000+

All of these things have come together


#15

Lot of truth to these observations. What some of us have be saying for years…
We have more cars than we need and they are lasting longer…
Remember too, the money isn’t there.

We had a president that insisted on operating a war with supplementary budgets…which means that money was not put on our debt and sold over seas but was taken directly out of our economy. Greenspan; the single biggest factor IMO, keeps lowering interest rates so people cannot retain wealth with safer savings accounts, are forced into stock investments where immoral traders buy and sell derivatives forcing the market in a position where the dollar is useless and must be bought and sold at ever increasing rates just to keep up. So much was taken out by these guys that even Ralph Nader back in 06 wanted to tax their income by 1% to slow down the practice, which would have removed the income tax on all those making $100K or less. That’s how much they were taking out of the economy …and if Nader knew it, Bushies did too.

Soon, honest traders could not make a buck and even reputable banks are forced into fraudulent practices just to “feed” their share holders. (I can’t blame them)

The Bush administration left the most archaic communications structure the incoming had ever seen. The incompetence was surreal. The economy moved much faster than their ability to comprehend…ie meltdown. Same with the war.
Notice most of advisors to Bush were bald (old)… advisors to Obama are eggheads with hair (young). NO ACCIDENT !

We need young people that are versed in technology and aren’t afraid to use it as a matter of course. I have an advanced degree in mathematics…so I feel life is about change. Preaching does not solve problems…engagement does.
I feel better with the eggheads (young ) than (baldies like myself) running this economy. The country reacts VERY slowly to change. But change it must in spite of some of we doubters.
My trust is in a young, well educated populus, and I plan on doing everything I can to support them.

So “common sense answer” and I will see things differently.
If you study calculus, you see that “change” IS “the common sense answer”.


#16

“Whitey” …insightful. I agree.


#17

That’s right.

You only “need” to buy a NEW car (or a newly used one if you are smart) every 13 years or so (at 15K a year). Why would anyone spend money when you don’t have it, or won’t have it soon due to:

A. Loss or cutback of your Job
B. Higher Taxes
C. Uncertainty of the future
D. All of the above

It’s time to conserve and cutback, not spend foolishly - something Congress doesn’t understand, but even the common man with a high school education does. Who’s the fool here?

As far as taxes go - scrap the current “system” (that even Obama’s “educated” cabinet picks can’t seem to understand) and implement the fair tax. Every dollar you earn - you keep. Then, when you decide to buy NEW (not USED, already taxed) things, you get to see how much Government costs you - with no free rides for politicians, drug dealers, or the 50% of the population of that pays nothing or near nothing right now!


#18

I have a hard time listening to people complain that too many people are saving money and paying down their debt. Make no mistake about it, these behaviors are the silver lining of the cloud that is this economic slow-down. Carrying too much debt is bad. Not saving for the future is bad. We should all be debt free and saving for the future. The problem is that we have an economy that depends on people making bad decisions. What needs to change is the dependence on bad decisions, not the fact that people are finally making the right decisions!


#19

Then why is Toyota selling a lot of vehicles? if people don’t want bundled options


#20

"It’s time to conserve and cutback, not spend foolishly - something Congress doesn’t understand, but even the common man with a high school education does. Who’s the fool here? "

With that kind of reasoning, even someone who couldn’t speak English would know. We tried that for 8 years.
According to “his” reasoning:
Let’s see…it’s OK to spend $30 million a month on unemployment benefits to insurgents in Iraq, but not reroute that money to the tax payers…