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Why Have Auto Sales Collapsed In US, EU, Japan?  
User currently offlineDerico From Argentina, joined Dec 1999, 4304 posts, RR: 11
Posted (5 years 10 months 1 week 1 day 11 hours ago) and read 2837 times:

During the Argentine economic crisis car sales plunged by as much as 56%, given the severity of that crisis it is not something totally surprising. Of course they rebounded and this year will be a record high, in spite of the end of the year which may see the first signs of the recessions in the first world and the Brazilian and Chinese slowdowns hitting us with much slower sales.

What is shocking is that similar numbers, drops of 30% in the US, 40% in Spain, 25% in Great Britain, etc, are now commonplace month to month. Given that these countries have superior disposable income than Argentina and certainly deeper and more competitive credit market and financing capabiities for consumers, what explains such severe drops in car sales? These numbers are reflective of all EU nations and North America and Japan... not exactly emerging markets. Yet those numbers are nearly as bad as emerging markets in turmoil where credit is GONE, currencies are devalued, and people have to pay cash for cars.

Why are car sales so terrible?


My internet was not shut down, the internet has shut me down
37 replies: All unread, showing first 25:
 
User currently offlineLAXintl From United States of America, joined May 2000, 25369 posts, RR: 49
Reply 1, posted (5 years 10 months 1 week 1 day 11 hours ago) and read 2828 times:

Well in the US, I'll give you two reasons 1) people holding onto their money and not making major purchases 2) Difficulty financing cars - some brands have stopped leasing completely, while others having a difficult time qualifying clients for financing to buy them unless you have strong credit score.

To me however the slow down has been very beneficial. Last month I picked up a European luxury car at $8,000 below MSRP!

Like I say, in adversity there is opportunity!



From the desert to the sea, to all of Southern California
User currently offlineAirCop From , joined Dec 1969, posts, RR:
Reply 2, posted (5 years 10 months 1 week 1 day 11 hours ago) and read 2823 times:



Quoting Derico (Thread starter):
Why are car sales so terrible?

People are afraid to spend money of new cars,when it's possible they might lose their employment especially where there might be pressing needs in other areas of the household, ...that's just for starters.


User currently offlineScrubbsYWG From Canada, joined Mar 2007, 1495 posts, RR: 0
Reply 3, posted (5 years 10 months 1 week 1 day 11 hours ago) and read 2823 times:



Quoting Derico (Thread starter):
more competitive credit market and financing capabiities for consumers

Not heard of the recent credit crisis? Consumer confidence way way way down? Record job losses this year? etc. etc. etc.? Doesn't surprise me that car sales are down. People have lost a lot of money in houses and investments. The last thing they are going to do is buy a $30 000 car.


User currently offlineSTT757 From United States of America, joined Mar 2000, 16866 posts, RR: 51
Reply 4, posted (5 years 10 months 1 week 1 day 11 hours ago) and read 2816 times:

People are worried about two things.

1.) Will they still have a job
2.) can they pay their mortgage



Eastern Air lines flt # 701, EWR-MCO Boeing 757
User currently offlineCadet57 From United States of America, joined Jul 2005, 9085 posts, RR: 30
Reply 5, posted (5 years 10 months 1 week 1 day 11 hours ago) and read 2814 times:



Quoting STT757 (Reply 4):

Id go a few further

-Can I afford to heat my home this winter
-Can I keep food on my table.



Doors open, right hand side, next stop is Springfield.
User currently offlineArrow From Canada, joined Jun 2002, 2676 posts, RR: 2
Reply 6, posted (5 years 10 months 1 week 1 day 11 hours ago) and read 2802 times:
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Because when people fear for their jobs, they are very reluctant to make big ticket purchases which require them to borrow money. The only bigger ticket item for most folks is their house -- and we all know where that market is right now.

Combine that with the fact that lending institutions are getting a lot stingier (for obvious reasons) about who they will loan money to. Add to all that the fact that Americans (Canadians too, but to a lesser extent) are already in hock up to their eyeballs.

And finally -- North American manufacturers (the so-called big three) are still trying to flog gas guzzlers that no one wants. Oil may be under $60 bbl, but anyone with half a brain knows that long term it's going to go up again.



Never let the facts get in the way of a good story.
User currently offlineDavid L From United Kingdom, joined May 1999, 9524 posts, RR: 41
Reply 7, posted (5 years 10 months 1 week 1 day 9 hours ago) and read 2767 times:



Quoting Derico (Thread starter):
Given that these countries have superior disposable income

But increased costs mean you have to think more carefully about what you need, unless your income is so great that you can't spend it or invest it fast enough. E.g. do you need a new car now or can you keep your existing one a while longer?

Quoting Derico (Thread starter):
and more competitive credit market and financing capabiities for consumers

Yeah, as explained above, there's a bit of a snag there.  Smile


User currently offlineMD-90 From United States of America, joined Jan 2000, 8507 posts, RR: 12
Reply 8, posted (5 years 10 months 1 week 1 day 7 hours ago) and read 2710 times:



Quoting Derico (Thread starter):
Why are car sales so terrible?

This is a balance sheet recession. People and businesses need to save and purge bad debts.


User currently offlineGordonsmall From UK - Scotland, joined Jun 2001, 2108 posts, RR: 21
Reply 9, posted (5 years 10 months 1 week 1 day 7 hours ago) and read 2709 times:



Quoting David L (Reply 7):
E.g. do you need a new car now or can you keep your existing one a while longer?

Exactly! The fact is that most people in the UK who purchase new(er) vehicles do so out of want, rather than need.

In the current climate many of those people are simply hanging on to their existing cars which are still prefectly serviceable.



Statistically, people who have had the most birthdays tend to live the longest.
User currently offlineA332 From Canada, joined Feb 2005, 1644 posts, RR: 2
Reply 10, posted (5 years 10 months 1 week 1 day 7 hours ago) and read 2708 times:

You can barely even push a used car these days without practically giving it away.... people are nervous and holding their money... until things look rosier, that's how it's going to stay.

It's not just auto sales that are down... look at Circuit City... retailers are taking a major hit and if the Christmas season does not result in adequate levels of sales, there will be many more in trouble come January.

It's just the tip of the iceberg, in my opinion.



Bad spellers of the world... UNTIE!
User currently offlineAsuflyer05 From United States of America, joined Feb 2004, 2372 posts, RR: 3
Reply 11, posted (5 years 10 months 1 week 1 day 2 hours ago) and read 2650 times:

Don't forget that leasing, which for some of the import manufacturers is a major chunk of their business, is much less attractive nowdays. Banks got tired of taking it on the chin when the values of their cars dropped out of the sky. So they lower the residual value of the car so the buyer is now paying more depreciation over the term which means a higher payment.

User currently offlineFalcon84 From , joined Dec 1969, posts, RR:
Reply 12, posted (5 years 10 months 1 week 1 day 1 hour ago) and read 2638 times:



Quoting LAXintl (Reply 1):
Well in the US, I'll give you two reasons 1) people holding onto their money and not making major purchases 2) Difficulty financing cars - some brands have stopped leasing completely, while others having a difficult time qualifying clients for financing to buy them unless you have strong credit score.

Bingo. Give that man a cigar. Those are the reasons.

People are scared to death about the economy-and, by extension-their jobs right now, and, unless someone is very secure in their jobs, major purchases can wait until this crisis has passed. And the credit crunch is making it terribly difficult to buy any big-ticket items.

I'll probably be buying a car in 2 to 3 years, and that may be good timing. Hopefully, we're seeing light at the end of the tunnel of this financial meltdown, and there should be even more fuel-efficient models out by then-plus credit will be a bit easier to come by-I hope.


User currently offlineManuCH From Switzerland, joined Jun 2005, 3011 posts, RR: 46
Reply 13, posted (5 years 10 months 1 week 15 hours ago) and read 2579 times:
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I have my own theory regarding this financial crisis: a big part of it is created by mass media.

Let's be honest (and I'm talking about Europe here, it could be different in the US, but this thread is about US, EU and Japan): I don't know one single person who lost his job or is earning less money because of this crisis. Nonetheless, everyone is scared. Why? Because you hear on TV every day how bad everything is going to be. People don't know whom they should believe, there are hundreds of different opinions, and this causes the downing of "consumer confidence".

Somehow I feel that this is all blown out of proportion. But again, this is just my own opinion.



Never trust a statistic you didn't fake yourself
User currently offlineRFields5421 From United States of America, joined Jul 2007, 7607 posts, RR: 31
Reply 14, posted (5 years 10 months 1 week 15 hours ago) and read 2565 times:



Quoting Gordonsmall (Reply 9):
Exactly! The fact is that most people in the UK who purchase new(er) vehicles do so out of want, rather than need.

In the current climate many of those people are simply hanging on to their existing cars which are still prefectly serviceable.

It is not just the UK.

Across the world new car sales are driven more by want than need. Even now with the declining numbers, the new car purchasers are still making the purchases not because they must have a NEW vehicle, but because that is what they want, and in most cases believe they can afford.

And there are great bargains out there for people with the cash available - amazing bargains.


User currently offlineLTBEWR From United States of America, joined Jan 2004, 13113 posts, RR: 12
Reply 15, posted (5 years 10 months 1 week 14 hours ago) and read 2543 times:

Some additional factors besides those mentioned (especially as to the USA market):

People are keeping their vehicles longer now, like 5-6 years or more due to them taking out longer loans.

Many who want or wanted to dump their SUV's or less efficient cars for more efficent cars found the trade-ins or resales went to the basement, so have to keep their current vehicles. Fortuntally fuel prices have dropped a lot so one can keep them for a bit longer.

Discounted or 0% financing deals were offered in the past, people took advantage of them, so don't need a newer vehicle now.

Buying late model used owned and off-lease vehicles if they need a new vehicle.

Not wanting to have any loan debt.

There current car is still in good shape, they maintain it, no need for a newer vehicle.

Most cars are a lot more reliable, need less maintence, less frequent wear and tear work, so less need to replace a vehicle.

Cars and trucks are a lot less of an ego thing anymore, don't need a new car anymore. to boost one's ego.


User currently offlineRabenschlag From Germany, joined Oct 2000, 1007 posts, RR: 0
Reply 16, posted (5 years 10 months 1 week 13 hours ago) and read 2540 times:

In Germany, I think part of the equation is that the income of joe average has been stagnating since 5 years or so (in fact, many people make less money when adjusted for inflation).

At the same time, the cost of buying and maintaining cars has increased disproportionately.

In Germany, a Saturn (Opel) Astra (1.8 Ecotec 5 dr.) costs app. 20.000 $ before taxes and app. 24.500 $ after taxes.

In the US, it's 16.000 before taxes and perhaps 17.500 after taxes depending on where you live.

At the same time, the averave income of regularly employed workers (blue collar) in Germany in 2006 was about 27.000 $ / year after taxes including retirement plan and health insurance for the whole family. So it almost takes one year's income to buy an entry level car.


User currently offlineMelpax From Australia, joined Apr 2005, 1619 posts, RR: 1
Reply 17, posted (5 years 10 months 1 week 13 hours ago) and read 2526 times:



Quoting LAXintl (Reply 1):
Well in the US, I'll give you two reasons 1) people holding onto their money and not making major purchases 2) Difficulty financing cars - some brands have stopped leasing completely, while others having a difficult time qualifying clients for financing to buy them unless you have strong credit score.

Here in Australia, GE & GMAC have announced they are closing down their car finance operations here. One of the major effects of this is that many dealerships here are in a mad scramble to obtain new sources of credit for their stock, which is not an easy task given current circumstances. Only today I was at an auction house here & they had a stock of brand new cars to be auctioned that were repossessed from a Holden (GM) dealership that had closed down.

http://www.goauto.com.au/mellor/mell...2/C50516C670BC093BCA2574F0001CCD09



Essendon - Whatever it takes......
User currently offlineAsuflyer05 From United States of America, joined Feb 2004, 2372 posts, RR: 3
Reply 18, posted (5 years 10 months 1 week 13 hours ago) and read 2522 times:

Melpax, are you in the car business in Australia?

User currently offlineMelpax From Australia, joined Apr 2005, 1619 posts, RR: 1
Reply 19, posted (5 years 10 months 1 week 13 hours ago) and read 2519 times:

Not at the moment, but my family was previously, used to own a petrol station... Also, most of the big auction houses here are open to the public, as well as the dealers.

[Edited 2008-11-15 06:46:25]


Essendon - Whatever it takes......
User currently offlineCadet57 From United States of America, joined Jul 2005, 9085 posts, RR: 30
Reply 20, posted (5 years 10 months 1 week 6 hours ago) and read 2453 times:



Quoting ManuCH (Reply 13):
I don't know one single person who lost his job or is earning less money because of this crisis.

Myself, and both my parents. I went from 20-30 hours a week to 10. My father used to get about 10-12 hours of over time a week on top of a 40 hr week, he's down to maybe 2-3 hours of o/t. My mom works a little less each day from what she was this time last year.



Doors open, right hand side, next stop is Springfield.
User currently offlineMD-90 From United States of America, joined Jan 2000, 8507 posts, RR: 12
Reply 21, posted (5 years 10 months 1 week 5 hours ago) and read 2428 times:



Quoting LTBEWR (Reply 15):

People are keeping their vehicles longer now, like 5-6 years or more due to them taking out longer loans.

5-6 years is longer? We have a 20 year-old F-150, a 12 year-old Civic, and a 12 year-old Grand Caravan. My dad just paid cash for a new RAV4 replacing his 14 year-old Explorer. What is wrong with maintaining a vehicle and getting some value out of it?

So many people feel the need to keep up with the Joneses and use cars as status artifacts rather than as practical transportation. This is changing with the loss of the easy credit bubble that the our central bank and other worldwide central banks created.


User currently offlineDougloid From , joined Dec 1969, posts, RR:
Reply 22, posted (5 years 10 months 1 week 5 hours ago) and read 2426 times:



Quoting Derico (Thread starter):
Why are car sales so terrible?

Mucho trabajo, poco dinero.

Quoting Arrow (Reply 6):
And finally -- North American manufacturers (the so-called big three) are still trying to flog gas guzzlers that no one wants.

If I had to take a guess I would call that the Big Four. In the field of gas guzzlers Toyota is doing a great job flogging SUVs that they're having to give away at fire sale prices.


User currently offlineCadet57 From United States of America, joined Jul 2005, 9085 posts, RR: 30
Reply 23, posted (5 years 10 months 1 week 5 hours ago) and read 2426 times:



Quoting MD-90 (Reply 21):
What is wrong with maintaining a vehicle and getting some value out of it?

Nothing, its what we do in our family. I have a 5 year note on my car but would love to get atleast 7 out of it.



Doors open, right hand side, next stop is Springfield.
User currently offlineDougloid From , joined Dec 1969, posts, RR:
Reply 24, posted (5 years 10 months 1 week 5 hours ago) and read 2420 times:



Quoting Cadet57 (Reply 23):
Quoting MD-90 (Reply 21):
What is wrong with maintaining a vehicle and getting some value out of it?

Nothing, its what we do in our family. I have a 5 year note on my car but would love to get atleast 7 out of it.

1987 Mitsubishi pickup. 160,000 miles on it. Freshened up the engine at 130,000 miles. I did it all myself.

1993 Mazda MPV. 150,000 miles on it.


25 Cadet57 : Heh, that thing is as old as me
26 Flybyguy : Job security is above anything else. With job security comes consumer spending. IMHO this has nothing to do with the ability to secure a loan... this
27 Dougloid : Jeez.....took you long enough to figger it out. Had you been born blue collar you would have imbibed it with your mother's milk.
28 Aaron747 : [quote=Flybyguy,reply=26II have learned valuable lessons from this downturn having newly entered the working world from school. 1) Live within your me
29 CPDC10-30 : You're living a very privilged life then! I managed to withdraw my savings from and Icelandic bank two weeks before they went bust, and now have a pa
30 Post contains links Alessandro : I think many in the carindustry has shot themselves in the foot by making cars more and more difficult to maintain by others than their own dealershi
31 ManuCH : I'm very sorry to hear this. At this point I guess we're just very lucky in Switzerland (at least for now)...
32 Centrair : Japan Car industy. Domestic market has slowed for several reasons. Though there is an economic downturn, Japanese are not big debt builders on a perso
33 Dougloid : I wouldn't think you're far wrong Allesandro. Field maintainability has always been problematical at least partly because of the compartmentalization
34 Alessandro : Poor design is one thing, deliberatly trying to stop owners and independent shops to do work is another. Change of lightbulbs is such thing. Well, eno
35 Dougloid : That's right, folks. There is no shortage of good serviceable automobiles and trucks available that maybe need a little work here and there. Fact is,
36 NA : But that not only applies to blue collar workers but also for the majority of other employees and relatively ordinary people. In the last 4 1/2 years
37 Prebennorholm : In not so rich countries: Cars tend to go out of business when they break down due to age and it is not feasible any longer to repair. When it breaks
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