Reeling from a relentless sales slide, Toyota Motor Corp (7203.T) said on Wednesday it would stop all of its North American factories for two days next month, while rival Nissan Motor Co (7201.T) renewed its pessimism over the industry's near-term prospects.
Ghosn told CNBC that U.S. industry-wide sales falling to 11-11.5 million vehicles next year was a "realistic" assessment. Sales totaled 16.15 million in 2007.
According to the article car sales have dropped almost 30% year over year. That's a huge drop. Here are the factors that led to the drop:
1.) The credit crunch. Car are bought on credit. Tighter credit means fewer buyers.
2.) A massive drop in consumer confidence caused by a worsening job market, crashing stock market and continued weakness in housing. Those factors were essentially a Tsunami that guaranteed any durable good purchased would be hammered really hard.
Also leading to big problems for Detroit are the low resale value of US cars:
Detroit's auto makers continue to lag behind Asian and European competitors in car resale value, an important consumer gauge.
Kelley Blue Book, a well-known vehicle appraiser, plans to announce Wednesday its annual ranking of the top 10 brands for projected resale value -- and not a single one will be American. Kelley, which ran its calculations before the big car makers began pushing for government financial help, defines resale value as the amount of a vehicle's sticker price that is retained after five years of ownership. The typical Chrysler car, for example, is expected to retain just 24.2% of its original cost. By comparison, the top-rated Honda brand's vehicles are expected on average to retain 44.5% of their value.
The typical Chrysler car is expected to retain just 24.2% of its original cost. By comparison, the top-rated Honda brand's vehicles are expected on average to retain 44.5% of their value.
The U.S. industry's poor showing bodes poorly for its ability to win back consumers to American brands after years of slipping market share. Resale value, also known as residual value, is a factor consumers consider closely when buying or leasing a new car. Because monthly lease payments cover the difference between a vehicle's sticker price and its expected value at the end of the lease, cars that hold their value better have lower lease payments.
After the Honda brand, made by Honda Motor Co., Kelley Blue Book's top picks include the Toyota brand, made by Toyota Motor Corp.; Volkswagen AG's Volkswagen brand; the Subaru brand by Fuji Heavy Industries Ltd.; and Toyota Motor's luxury Lexus brand. Rounding out the top 10 are BMW AG's BMW brand; Nissan Motor Co.'s Infiniti brand; Honda's Acura brand; Volkswagen's Audi brand; and the Nissan brand.
And on the topic of dropping sales:
Gleaming new Mercedes cars roll one by one out of a huge container ship here and onto a pier. Ordinarily the cars would be loaded on trucks within hours, destined for dealerships around the country. But these are not ordinary times.
For now, the port itself is the destination. Unwelcome by dealers and buyers, thousands of cars worth tens of millions of dollars are being warehoused on increasingly crowded port property.
And for the first time, Mercedes-Benz, Toyota, and Nissan have each asked to lease space from the port for these orphan vehicles. They are turning dozens of acres of the nation’s second-largest container port into a parking lot, creating a vivid picture of a paralyzed auto business and an economy in peril.
“This is one way to look at the economy,” Art Wong, a spokesman for the port, said of the cars. “And it scares you to death.”
The backlog at the port is just part of a broader rise in the nation’s inventories, which were up 5.5 percent in September from a year earlier, according to the Commerce Department. The car industry has been hurt particularly, with sales down nearly 15 percent this year.
The drop in sales is now causing a huge build-up of inventory conveniently parked in a giant lot in California. Not a good sign.
All of this is leading up to a giant case of political theater:
WASHINGTON -- The chief executives of Detroit's Big Three auto makers appealed in dire language for U.S. taxpayers to help their industry, but couldn't dispel doubts in Congress that have clouded prospects for a government-led rescue.
In appearances Tuesday before the Senate Banking Committee, the leaders of General Motors Corp., Ford Motor Co. and Chrysler LLC, together with the head of the United Auto Workers union, argued the shaky U.S. economy couldn't withstand a collapse of any of the companies.
The chief executives of GM and Chrysler said they could run out of funds without the government's support. GM CEO Rick Wagoner said the package is needed to "save the U.S. economy from a catastrophic collapse."
The question is can Detroit survive until January?