Monday, September 21, 2009

September Car Sales Fall Flat On Their Face

Apparently this Boston Globe writer missed the memo that the reason September auto sales are just an abysmal disaster is not because demand was pulled forward into July and August from today and the future, as TILB predicted it would, but that it's simply an inventory problem. The author, Megan Woolhouse, seems to believe - crazily, we might add - that there is a demand problem when clearly there is a supply problem.

If only the automakers would provide dealers with more inventory, all of these ills in the auto industry would be cured, as the lunatic Peter Fong stated.

Here are a few choice quotes from the article which highlights Woolhouse's fundamental misconception [emphasis added]:
Manager Adam Silverleib said business was “pretty intense’’ as a result of the federal stimulus program, with the dealership hustling to accommodate customers and handle the piles of paperwork required for them to receive reimbursement on vouchers. “Now we’re kind of back to where we were in the spring,’’ he said.

In an attempt to draw customers back to showrooms, some dealers are offering new incentives, albeit none as enticing as a $4,500 for a rusting junker. Silko, for example, is promoting 2.9 percent financing on new Accords, along with other deals on its website.

Nationwide, customers snatched up 700,000 new cars, most of them foreign-made, and the government ended up paying out nearly $3 billion toward the purchases. But from the start, analysts predicted that Cash for Clunkers would not boost sales for the year. September’s sales swoon seems to be making their case. Car sales are usually slow after Labor Day, but because of the recession consumers this year are especially reluctant to say yes to major purchases. To make matters worse for dealers, most are still waiting for voucher reimbursements.

“It was probably, in the end, a complete waste of taxpayer money,’’ said John Wolkonowicz, a senior auto analyst at IHS Global Insight, Lexington forecasting firm. “The dealers, who were supposed to be the primary beneficiaries, many were forced into cash flow problems because the government didn’t pay them in a timely fashion.’’
This program was very good at getting product off the lot, but there haven’t been long-term benefits,’’ he said. “Dealers are reporting that showrooms are pretty dead right now.’’

Wolkonowicz said the fall slowdown may have been worsened by the program because many buyers came out early to take advantage of the program instead of waiting until now to shop.

In Raynham, Silverleib is relying heavily on longtime customers ready for a new model. But he is realistic about the state of the auto business, and skeptical that the economy is out of the woods.

“Speaking as someone on the front lines, we’re still in a recession,’’ he said.
I love the smell of napalm in the morning...especially when its victim was my tax dollars.

[HT: LB]