Best of the Week
Most Popular
1.Crude Oil Price Trend Forecast 2016 Update - Nadeem_Walayat
2.Will Deutsche Bank Crash The Global Stock Market? - Clif_Droke
3.Gold Price In Excess Of $8000 While US Dollar Collapses - Hubert_Moolman
4.BrExit UK Economic Collapse Evaporates, GDP Forecasts for 2016 and 2017 - Nadeem_Walayat
5.Gold Stocks Massive Price Correction - Zeal_LLC
6.Stock Market Predicts Donald Trump Victory - Austin_Galt
7.Next Financial Crisis Will be Far Worse than 2008/09 - Chris_Vermeulen
8.The Gold To Housing Ratio As A Valuation Indicator - Dan_Amerman
9.GDXJ Gold Stocks - A Diamond in the Rough - Rambus_Chartology
10.Gold Boom! End Game Nears As Central Banks Buying Up Gold Mining Companies! - Jeff_Berwick
Last 7 days
How Trump Can Win the U.S. Presidential Election After 1st Debate Meltdown - 1st Oct 16
Stocks, Bonds, Gold and Commodites - It’s January 2013, With a Twist - 1st Oct 16
Why Nervous Pensioners Are Running for the Exit - 1st Oct 16
Donald Trump Post Debate Meltdown, Betfair Betting Market Points to Collapse in Odds of Winning - 30th Sept 16
Silver Way Undervalued - 30th Sept 16
Why Krugman, Roubini, Rogoff And Buffett Dislike Gold - 30th Sept 16
After the Debate, the Deluge? - 30th Sept 16
Has Dow Theory Lost its Relevance: Stock Market Ignored it and Rallied to New Highs - 30th Sept 16
Donald Trump Failing to Recover After 1st Debate Hillary Shimmy Loss - Betfair Betting Market - 30th Sept 16
BEA Revises Q2 2016 US GDP Growth Upward to 1.42% - 29th Sept 16
Could the OPEC deal set stage for the Next Stock Market Risk Rally? - 29th Sept 16
Why Trump Lost, Hillary Won the 1st U.S. Presidential Debate - 29th Sept 16
Is a Dollar Crash Imminent After the Senate Overrides Obama Veto on Saudi 9/11 Bill? - 29th Sept 16
2017: Gold and Silver's Year of "Public Recognition" - 29th Sept 16
Did Trump Win the 1st US Presidential Election Debate? - There's Something Happening Here... - 29th Sept 16
FED Goes from ZIRP to NIRP! - 29th Sept 16 - Chris_Vermeulen
Here’s Why You Should Be in Cash Right Now - 28th Sept 16
The Fed Put a 50% Tax on Your Retirement Plan - 28th Sept 16
Massive Chinese Debt And Why They Are On A Gold Buying Binge! - 28th Sept 16
Stocks Commodities and FX Markets Waiting Technically While Fundamental Data Neutral Poised - 28th Sept 16
This Commodity Has Perked Up its Investors' Portfolios - 27th Sept 16
Charting the Continuing Gold Market Correction - 27th Sept 16
Stock Market Crash and Recession Indicator Warning: Extreme Danger Ahead - 27th Sept 16
Financial Markets and FX Setups 27th Sept - 27th Sept 16
Crude Oil, Forex and Stock Market Trend Forecasts - 27th Sept 16
Why There is Trump - 27th Sept 16
Save Up to 70% in Shopping Expenses for Daily Items - 27th Sept 16
Gold’s Moving Averages and Long-Term Outlook - 26th Sept 16
September Stock Market - The Not So Silent Demise of Deutsche Bank - 26th Sept 16
SPX sell signal confirmed - 26th Sept 16
SPX is testing the next level of support - 26th Sept 16
Outrageously Entertaining US Presidential Campaign Final Stages - What Happens Next? - 26th Sept 16
BoJ, FOMC and Where To Now? - 26th Sept 16
Stock Market New All Time Highs Next - 26th Sept 16
Why Trump Will Win US General Election 2016 Prediction Forecast - 26th Sept 16
Martial Law Rolls Out Across the US As Jubilee Nears - 26th Sept 16
Stock Market More Correction Likely - 25th Sept 16
US Presidential Election Forecast 2016 - Trump Riding BrExit Wave into the White House - 25th Sept 16
US Economy GDP Growth Estimates in Free-Fall: FRBNY Nowcast 2.26% Q3, 1.22% Q4 - 24th Sept 16
Gold and Gold Stocks Corrective Action Continues Despite Dovish Federal Reserve - 24th Sept 16
Global Bonds: Why Our Analyst Says Things Just Got "Monumental" - 24th Sept 16
Where Did All the Money Go? - 23rd Sept 16
Pension Shortfalls Could Be 4X To 7X Greater Than Reported - 23rd Sept 16
Gold Unleashed by the Fed - 23rd Sept 16
Gold around U.S Presidential Elections - 23rd Sept 16
Here’s Why Eastern Europe Is Doomed - 23rd Sept 16
Nasdaq NDX 100 Big Cap Tech Breakout ? - 23rd Sept 16

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

The Power of the Wave Principle

GM, Ford, Chrysler on Sales Collapse Risk Bankruptcy

Companies / US Auto's Sep 04, 2008 - 03:17 AM GMT

By: Mike_Shedlock

Companies Best Financial Markets Analysis ArticleThe Wall Street Journal is reporting Auto Sales Tumble, But Industry Sees Signs of Hope .
Sales of cars and light trucks fell 15.5% to 1.25 million last month, down from 1.48 million a year earlier, according to Autodata Corp. The closely watched seasonally adjusted annualized selling rate was 13.7 million vehicles, up from 12.55 million in July, but down from 16.3 million in August 2007, Autodata said.




"There are early indications of somewhat improving conditions," said Ford Motor Co. economist Ellen Hughes-Cromwick, in a conference call with analysts and reporters. She pointed to a decline of about 40 cents a gallon in the price of gasoline, improvement in a key measure of consumer confidence and an upward revision in the federal government's estimate of second-quarter economic growth.

"The biggest issue is credit," Chrysler President Jim Press said in an interview. "It isn't the gas mileage of the vehicles turning people off, it's getting credit and financing.

Disingenuous Talk At GM, Ford, Chrysler

There are no legitimate reasons to state "There are indications of somewhat improving conditions". Falling crude prices are a strong sign of a collapsing global economy. Second quarter GDP is simply not believable. See GDP Much Weaker Than Headline Numbers for the rationale.

To suggest that auto financing issues are "the biggest issue" is complete silliness. People are tapped out and increasingly frugality is one issue. GM, Ford, and Chrysler producing SUVs, trucks, and cars that are now out of favor is another reason.

Car Sales Post 10th Straight Decline

Bloomberg is reporting GM, Ford Drag U.S. Car Sales to 10th Straight Decline .

Here is my favorite quote from the article. It is from Chrysler President Jim Press: " Maybe towards the end of '09, going into 2010, there'll start to be some signs of recovery. "

GM Celebrates

In celebration of our 100th anniversary, we're sharing our GM Employee Discount . You pay what we pay. Not a cent more.



2009 models include Chevy HHR, Cobalt, Malibu, Impala, Equinox, Avalanche, Silverado, Buick Enclave, Pontiac G5, G6, Vibe, G8, Solstice, Torrent, GMC Acadia, Sierra, Saturn Aura, SKY, OUTLOOK, Cadillac CTS, SRX, DTS, STS, HUMMER H2 and H3. At participating dealers only. Take delivery by 9/30/08. See dealer for details.

If things were improving, would GM be celebrating?

On June 24 GM announced price hikes on 2009 models by an average of 3.5%. I called it GM's Ridiculous Bluff . Indeed it was.

I panned GM's Employee Pricing Ploy on August 19th with this statement:

" GM is offering over $4,000 in incentives and extending the offer to some 2009 models as well. It will not be long before the offer is extended to all 2009 models (and/or some other incentive program is put in place for 2009 models). "

Well that did not take too long.

The original offer was due to expire on September 2nd, but has now been extended to September 30th. Coverage of included 2009 models has been expanded to most 2009 models as noted in the above list.

Shop Until You Drive

Chrysler continued its 'Shop 'Til You Drive' Campaign by offering Up to 40 Percent Off MSRP.
"To help consumers, we are offering some of our most popular vehicles at significant savings. In August, we saw this formula generate new signs of momentum on vehicles like our Chrysler and Dodge minivans, Dodge Ram light-duty trucks and Jeep(R) Liberty. In September, we will continue to offer competitive values and showcase dynamic new vehicles like the 2009 Dodge Challenger, and hybrid Dodge Durango and Chrysler Aspen SUVs."

Chrysler's 'Shop 'til You Drive Sales Event' continues through Sept. 30, offering up to 40 percent off MSRP on select vehicles, and zero percent APR for 72-months on the 2008 Dodge Ram, Dodge Durango, Chrysler Aspen, Jeep Grand Cherokee and Jeep Commander. Especially strong values are available on Dodge Ram pickup trucks, with up to $9,000 discounts in select markets. The only sign of momentum is in reverse. Nonetheless, at 40% off Chrysler will eventually clear inventory. What a difference from 2006.

Chrysler Achieves All Financial Targets

Chrysler CEO says Chrysler Shrinking to a Profitable Size .
Chrysler cut a million units of assembly capacity in the past year, pared its lineup and now will thin its dealer ranks with a goal of making money on annual sales of as many as 2.5 million vehicles, down from an "unprofitable" 4 million, Press said today in Los Angeles.

In the first half of 2008, "we've achieved all of our financial targets that Cerberus set at the start of the year," Press said. Those must have been the easiest financial targets in automotive history.

Chrysler Tops Peers in Bankruptcy Risk

On August 15 Bloomberg reported Chrysler Tops Peers in Bankruptcy Risk, JPMorgan Says .
Chrysler LLC is the most likely of the three U.S. automakers to file for bankruptcy protection in the next two years, JPMorgan Chase & Co. said, citing a panel discussion among credit-rating companies.

General Motors Corp. is the next most likely and Ford Motor Co. is the least, JPMorgan analyst Himanshu Patel wrote in a report today, quoting discussion yesterday by analysts from Standard & Poor's, Moody's Investors Service and Fitch Ratings. S&P and Moody's both cut Chrysler's credit one level on Aug. 7, seven steps below investment grade.

Moody's cut GM's rating to Caa1 on Aug. 13. S&P lowered GM and Ford to B- on July 31. Fitch downgraded Ford to B- on Aug. 1, matching its action on GM on June 25.

Without government (taxpayer) bailouts, these companies simply cannot survive.

By Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Click Here To Scroll Thru My Recent Post List

Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management . Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.

Visit Sitka Pacific's Account Management Page to learn more about wealth management and capital preservation strategies of Sitka Pacific.

I do weekly podcasts every Thursday on HoweStreet and a brief 7 minute segment on Saturday on CKNW AM 980 in Vancouver.

When not writing about stocks or the economy I spends a great deal of time on photography and in the garden. I have over 80 magazine and book cover credits. Some of my Wisconsin and gardening images can be seen at MichaelShedlock.com .

© 2008 Mike Shedlock, All Rights Reserved

Mike Shedlock Archive

© 2005-2016 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Bobby Batts
11 Nov 08, 07:27
The Big Three

Why doesn't the big three cut prices even deeper on vehicles as any other retailer would to move merchandise? People are not going spend big bucks right now unless it is the ultimate deal. When that happens the dealerships will be asking for more vehicles to sell and profits will be up! Too many vehicles are above 20 thousand dollars in price and consumers are looking for those deals way below that price, but with all the goodies included. Not some stripe down verse! What is wrong with this idea?


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife