With holiday season here and gone, Detroit and DC are getting back to work. Time for a quick news round-up before things go crazy again. At least the Ford family's Detroit Lions aren't playing again until later this year.
All major automakers will release December and full-year 2008 sales data this Monday, January 4th. We'll post that information with our own analysis as soon as it becomes available, and we'll be looking forward to seeing your thoughts, too. (GM's 2008 holiday card; if you don't work in the car business, where else would you see this?).
Ford's highly-respected chief analyst, George Pipas, told industry journal Automotive News he expects industry-wide December US auto sales to drop by about 35 percent from December, 2007, with no sign of a turnaround in the first quarter of 2009.
Pipas said 2008 calendar year sales figures will be around 13.2 million, down at least 3 million from 2007's 16.2 million.
The average vehicle price in 2008 was $27,958. A 3 million unit drop translates into an almost $84 billion loss. (Have "lower" gas prices spurred sales of big trucks and SUVs again? Monday's sales figures will tell all).
Every carmaker selling cars and trucks in the US, whether they're headquartered in Highland Park or Stuttgart, Seoul or Tokyo, already feel the battering effect of these downward slides, as do all their suppliers. So will all their dealerships and their employees. And on and on and ...
The only other time the industry has seen a 3-million (or more) unit plunge was following the 1974 oil shortage.
There is some possible good news, though. On a full-year basis, Ford's Pipas said, 2008 is on track to become the first year since 2000 that passenger cars outsold light trucks (pickups, minivans and SUVs) in the United States. (Porsche's first four-door, the Panamera, is due in the US in 2010. Slow US sales will seriously hurt Porsche, which sells more than 25% of their annual vehicle production in the US, possibly slowing the scheduled arrival of new vehicles from the company).
The Treasury Department is injecting $5 billion directly into dealer and buyer financing company GMAC, in exchange for stock paying an 8% dividend, and preferred stock paying a 9% dividend.
To try and spur sales, after getting the cash GMAC lowered the FICO score threshold for financing GM customers from 700 to 620.
This week also, Chrysler and GM confirmed each received $4 billion from the bailout fund used for the finance industry. It was originally stacked with $700 billion; less than half remains.
General Motors will receive, from DC's Troubled Assets Relief Program (TARP), a total of $13.4 billion in three chunks, including this week's $4 billion, with two more payments, one in January and the final one February 17th (the last payment is described as being "contingent on congressional action").
Chrysler's December 29th $4 billion is the only TARP cash the company was scheduled to get.
The government will lend another $1 billion to GM to invest in GMAC. (Perfectly wonderful GM cars, like this Chevy Cobalt SS, are inexpensive, fun to drive and get great gas mileage. Why the company is planning to replace Cobalt with the Daewoo-engineered Cruze, which is not as good-looking and doesn't even have a solid production date yet in the US, is beyond us).
GMAC now no longer has the exclusive right to provide low-interest loans GM cars and truck buyers, and does not have to finance leases. GMAC loses money on leases because trade-in values are dropping dramatically, especially on large pickups and SUVs.
And new Treasury Department guidelines would let officials provide funds to any company they deem "important to making or financing cars." That means TARP money could go to the Detroit Three's supplier firms, if there's any left to spread around. The steel industry is already asking for their bailout money.
Potential car-buyers, take note: Dealers will often finance used cars, because they make money on interest points they don't get from all-cash deals. (When all is said and done, Chrysler just isn't making the kind of cars which Americans want to buy. Apart from some EVs trotted-out recently, which are nowhere near production-ready, and the utter failure of their "Hemi hybrid" Aspen and Durango models, this Dodge Challenger musclecar might, sadly, be the last nail in Chrysler's coffin).
All the auto industry support from Washington is coming in the form of loans, not the outright grants enjoyed by the finance businesses; only the automakers had to appear before Congress, provide plans for using the money, and explain how they will pay it back. No such public begging and degradation was demanded from banks or Wall Street's financial institutions. Guess being buddies with Hank Paulson "has its rewards," as the TV ad says.
Some more auto news-y tidbits:
Chrysler has canceled their annual dealer awards ceremony, traditionally held in some exotic location. The Detroit News quoted a Chrysler official saying, "the state of the market and the financial challenges the company faces, it made sense not to hold this year's reward meeting." This year's all-expenses paid trip for dealers and spouses was to be held at the Hilton Los Cabos Beach & Golf Resort in San Jose del Cabo, Mexico. Wonder if that's near any of Chrysler's three factories in Mexico?
GM's Hummer division is ending its sponsorship of the Rod and Chad Hall off-road race team, which brought it numerous victories.
And along with the Hummer brand itself, the Hall team's H1 and H2 SUT race trucks are now up for sale. How much? Maybe they're on Ebay: Check for a "Buy it now!" price.
NASCAR and off-road racer Robby Gordon, who competes in Baja and the Paris-Dakar rally, campaigns a vehicle built to look like a Hummer. He's said his hand-built race truck costs over $1,000,000 (but we've known Robby to exaggerate). (Top left, Robby Gordon's "$1,000,000 Hummer" race truck, top right, a Hummer entered in one of the recent DARPA government trials to develop fully-autonomous ground vehicles, and, bottom, the Hummer race truck which was driven by Rod Hall and his son, Chad).
Finally, from the "Just what America Needs at this Moment in Time Department" as reported by Automotive News:
"One of the highlights of Ford's display at the 2009 Detroit auto show will be the debut of the 2010 Mustang Shelby GT500, blessed by 86-year-old Shelby himself. (You're among the first - Introducing the 2010 Mustang Shelby).
The GT500 is equipped with the same powerplant that was fitted into last year's limited-edition GT500KR, a 5.4-liter supercharged V8 cranking out 540-hp at 6,200 rpm and 510 lb-ft of torque at 4,500 rpm. The car has a six-speed manual transmission."
No word yet on price - or mpg numbers.
Join us on Monday for the 2008 car sales (or non-sales) numbers.
Some photos (c) www.SteveParker.com.