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Disappointing August SAAR Estimate
The chart below says it all: August SAAR, estimated at 13.7 million by Citigroup economists, was slightly better than the prevailing consensus of 13.3 million, significantly below Goldman's ebullient expectation of 15.5 million, and will likely be seen as a disappointment of the impact of Cash for Clunkers. And now comes the subsidy hangover. Zero Hedge provides its September estimate of a 9.5 million SAAR, mostly as a function of at least 1.5 million auto sales having been pulled from forward periods. We would not be surprised if the actual number comes in below our estimate.
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Tyler, You are being to generous...
When, oh when, will Goldman finally lose the last scrap of its credibility?
How can you lose credibility when you don't have any?
Ican only imagine what it is like in other states.
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When govt intervention does.
You could add another bar for Citi as they were forecasting 15MM. And compared to Edmunds.com you are optimistic. They see the run rate at 8MM.
Absolutely! And how many of those cars bought on CFC will end up repoed? Our local credit union, Tinker Federal, has a yard chock full of repoes. And this in Oklahoma City, where suppossedly, "we have not been hit by this crisis yet".
There are so many repoes they overflow out into the employee/customer parking lot.
Green Shoots!
I would love to see pics of that! They are storing new cars under freeway underpasses here in LA now, never used to be there. Anyone else seen that? Think its under the 10 and 110 interchange...see it when im on 10 west
9.5 million in September?
You must have been smoking a plantation of "green shoots".
September is typically not the time to buy a new car.
At this point in time, what month is?
My wife and I drive 98 Fords, our daughter
has a 96 Toyota. All long ago paid for.
What month would be good for us to
trade paid for vehicles for payments? :-)
You'll have to wait for Obamas "crazy 8's cash", anything manufactured in a year ending in "8" gets a replacement rebate based on how much disposable income you can commit to new debt. Clunk your personal balance sheet today!
haha. nice flag btw. i'm sending it to flag@whitehouse.gov. they want flags right?
I would guess other 401k providers have self-directed options, but I am not sure, not being an expert in these things.
good articles; good articles 4 slow news day ..http://www..
hat tip: finance news & finance opinions
ROFL!
I have a '98 car. It's paid for. The insurance is cheap. It works fine as long as I change the oil. Why would I trade it in?
Ah right -- so I go into debt. That way, I am beholden to some corrupt bank that effectively stole money from my unborn grandchildren, and now want to loan it back to me at interest.
I just bought a toyota corolla with 135,000 miles on it, faded paint.
Runs like a top. Incredibly smooth engine, no vibrations on the highway, straight alignment, 35 mpg. Just awesome mechanically.
Fuck GM and the zombie union. And the liberals and their clunker scam.
Didn't Elton John sing a song about this in the Lion King ( The Circle of Strife , or was it "Life")
Desparate people in desparate times do desparate things. It doesn't guarantee success as desparate folks don't think ahead.
I deal on cash basis. Rarely use any credit card,and rarely have any bill to pay. And that caused me to neglect paying my car payment and subseqently had to pay for the repo guy. The story is that when I am at his place I see towing trailers with a couple of nice new cars. So I ask the guy"how is business"?And he says"this month it realy picked up,in fact it is great". And this is in the northeast where the economy has not had such a severe dip as other parts. Ican only imagine what it is like in other states.
Why does Calculated Risk show 14.1 million?
What is the real number here?
http://www.calculatedriskblog.com/2009/09/light-vehicle-sales-141-million-saar-in.html
Both numbers still are preliminary estimates. I have used Citigroup's prelim
I bought a Pooorsche with all of the money I made trading Citi and FNM.
You leased it. Who you kiddin'?
No that's called insurance. Having the privelage of buying a car and then leasing it from the insurance companies so if it gets hurt you get it fixed badly.
The seasonal thing throws me off. It probably means for the month about 1.4mm cars were sold. Of that 700k were clunkers. So without the subsidy car sales were in the tank.
First time home buyers were 1/3 of all homes purchased for July. That sounds nice. BS. It is just the tax rebate of $8,000. It is like the SAAR for cars. When the subsidy stops we revert back to deflation.
If it was 700k clunkers, 200k or so of those aren't going to really close. The gov't is going to kick back quite a bit of the paper and the dealers are going to be writing scripts for their fi-guys.
"Do you like the unit? That's great! We have a problem, the gov't funds didn't come through so we have to add 4500.00 to your balance but it will only cost you a few bucks more a month, when can you come by to sign off?"
CFC helped clear the "Channel"
So now plan for production of < 10M.
The Auto complex continues it's miserable spiral.
The Joker is running low on tricks.
What the hell happened to the daily Robotrader report?
His avatar must have come to life
"Cash for Clunkers" was not intended to jump start the US economy, it was aimed and timed for the Japanese elections--which that as well didn't pan out for the US
Does anyone know where stats are maintained for reposessions? It would be fun to watch that ratchet up little by little over the next 12-24 months as those that bought their new cars forgot to take into account the fact that their auto insurance would double or triple what it was for their clunker.
The official tally from cars.gov says 700K cars. How do you figure 1.5 million auto sales having been pulled from forward periods? Are you assuming another 800K visited a dealer and bought as a result of C4C even though they didn't get anything from it?
That FNM & FRE equities are still traded is a sign that yes, the guvmint is perpetrating fraud (was there ever any doubt?).
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hat tip: finance news & finance opinions
Maybe it can help!! direct from the economist research
August 8th 2009 Printer version
FROM THE ECONOMIST INTELLIGENCE UNIT
Automotive report:
(Forecast closing date: July 28th 2009)
New passenger car registrations, international comparison
('000)
2004a 2005a 2006a 2007a 2008b 2009c 2010c 2011c 2012c 2013c
USd 16,865 16,948 16,504 16,089 13,127a 9,560 10,286 10,687 11,708 12,351
China 2,421 2,941 3,878 4,818b 5,197 5,280 5,666 6,496 7,376 8,539
Japan 4,768 4,748 4,642 4,400b 4,292 3,801 3,858 4,029 4,114 4,202
Germany 3,267 3,319 3,468 3,148 3,079 2,847 2,806 2,866 3,021 3,156
a Actual. b Economist Intelligence Unit estimates. c Economist Intelligence Unit forecasts. d Including light trucks.
Source: Economist Intelligence Unit.
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Automotive report: Overview
The US accounts for around one-fifth of global automotive sales. However, sales have been falling in recent years. In 2008 total passenger vehicle registrations amounted to 13m units, down from a peak of 17.3m units in 2000.
The automotive industry has traditionally been one of the prime drivers of the US economy. Direct employment in the motor vehicle and motor vehicle equipment industry amounted to just over 800,000 at end-2008, using data from the US Department of Labour's Bureau of Labour Statistics (BLS). If the definition is widened to include jobs dependent on the automotive sector (for example, independent repairers, vehicle shipping services, the aftermarket industry, car wash employees, tow truck drivers and rental car employees), the figure is closer to 13m jobs, or 10% of the labour force according to the Alliance of Automobile Manufacturers.
Regardless of measure, however, the sector's influence is waning, in terms of employment, as the main manufacturers are now in the middle of tough restructuring programmes that involve the shedding of thousands of production-line workers.
The vastness of the US market has traditionally inhibited domestic manufacturers from focusing on exports, and most US vehicle models are designed specifically for the US market and have limited appeal to buyers in most other countries. But for foreign manufacturers, the US market has traditionally provided significant potential in terms of sales and profits. The result is an enormous US trade deficit in automotive goods, which has climbed relentlessly since 1989.
Automotive imports from Canada and Mexico are tariff-free under the North American Free Trade Agreement (NAFTA); most other countries, with a few notable exceptions, face low tariffs. Canada and Mexico account for about two-fifths of the trade deficit in automotive goods, with Japan, South Korea and Germany accounting for most of the rest.
The US is the world’s second-biggest producer of passenger vehicles, after Japan, typically defined in the US to include light trucks as well as passenger cars. On this definition, the US produced 8.7m units in 2008, down from 11.4m units in 2006. The 2008 figure compared with 11.4m units in Japan.
Income and demographics
2004a 2005a 2006b 2007b 2008b 2009c 2010c 2011c 2012c 2013c
Nominal GDP (US$ bn) 11,686 12,422 13,178a 13,808a 14,265a 13,958 14,152 14,488 14,824 15,360
Population (m) 293.7 295.7 298.4a 301.3a 304.1 306.8 309.6 312.3 315.2 318.0
GDP per head (US$ at PPP) 39,794 42,004 44,157a 45,827a 46,914 45,497 45,717 46,386 47,037 48,304
Private consumption per head (US$) 27,910 29,398 30,851a 32,228a 33,079 32,227 32,487 32,804 33,261 33,986
No. of households (m) 112.0 112.7 112.2 113.2 114.1 115.1 116.1 117.0 118.0 119.0
No. of households with annual earnings above US$5,000 (m) 112.0b 112.7b 112.2 113.2 114.1 115.1 116.1 117.0 118.0 119.0
No. of households with annual earnings above US$10,000 (m) 104.9b 105.9b 106.0 107.4 108.6 109.7 110.8 111.8 113.0 114.1
No. of households with annual earnings above US$50,000 (m) 63.1b 65.2b 68.0 70.7 72.9 74.4 76.1 77.4 79.0 80.7
No. of households with net wealth over US$1m (m) 5.4 5.9 7.0 7.6 6.7 4.6 4.9 5.2 5.6 6.1
a Actual. b Economist Intelligence Unit estimates. c Economist Intelligence Unit forecasts.
Source: Economist Intelligence Unit.
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Automotive report: Passenger vehicles
The largest domestic vehicle producer in January-July 2009 was Ford Motor, with 26% of US car and truck production. Next came General Motors (GM) with 21% and Chrysler with 8%. The so-called Big Three had accounted for a larger share of production before the current US downturn—indeed, GM had been the largest producer—but production at GM and Chrysler has been hit by reorganisation following their respective bankruptcies in early 2009.
Passenger car registrations
2004a 2005a 2006a 2007a 2008a 2009b 2010b 2011b 2012b 2013b
Passenger cars (stock per 1,000 people) 462.0 461.3 457.6 449.6 457.8 448.8 429.4 413.3 402.0 393.8
Passenger car registrations ('000) 16,865 16,948 16,504 16,089 13,127 9,560 10,286 10,687 11,708 12,351
Passenger car registration growth (%) 1.3 0.5 -2.6 -2.5 -18.4 -27.2 7.6 3.9 9.6 5.5
a Actual. b Economist Intelligence Unit forecasts.
Source: Economist Intelligence Unit.
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Demand. High income levels, combined with a high degree of dependence on the car for all types of journeys, have generated a high level of car ownership in the US. Population growth and a relatively high scrapping rate have also been factors supporting demand. With around 450 cars per 1,000 of the population, the stock of passenger cars per head is one of the highest in the world. However, if light trucks are taken into account, the US has a higher concentration of passenger vehicles than any other country, at over 800 per 1,000 of the population. This makes the US the most mature market in the world.
The US passenger car market is typically defined to include light trucks—pick-ups, multi-utility vehicles (MUVs) and sport-utility vehicles (SUVs)—as well as cars. On this basis, there were 13.1m new registrations in the US in 2008, a decline of 18.4% on the previous year. The decline was largely the result of the sharp deterioration in the health of the US economy over the year, and the reduced availability of credit at affordable rates.
Sales had been remarkably resilient during the economic slowdown in 2001-02. Special incentive schemes, such as employee pricing for everyone and cash rebates, and offers of low-rate financing buoyed the market in those years. These incentive schemes continued to play a role in 2003-07, but their effectiveness decreased over time.
The short-term outlook for the US automotive industry is poor. Highly indebted consumers are being squeezed by the loss of personal wealth implied by the very weak housing market on the one hand, and continued difficulties for many in accessing credit on the other. These are likely to persuade consumers of the need to rebuild their balance sheets after years of overspending.
The use of incentives over the past few years has also created a glut of nearly new cars in the US, depressing the residual values of used cars. This means that, even when the economy was growing rapidly, there has been little pent-up demand for new cars.
Low residual values and the trend towards longer loan periods have led to a growing proportion of consumers who are “upside down” in their loans, with trade-in values that are worth less than the remaining loan. This negative equity will make many car owners even more reluctant to replace their existing car.
Annual sales reached an all-time high of 17.3m units at the peak of the last economic cycle in 2000. The industry has fought hard since then to maintain sales, primarily by the above-noted aggressive use of price discounts and cheap financing. But after an essentially stagnant market in 2004-05 and moderate declines in 2006-07, passenger vehicle registrations plummeted by 18.4% in 2008. Registrations are forecast to fall by a further hefty 27% in 2009.
This will take total sales in 2009 down to just under 10m units, the lowest level since 1970, and will also hit petrol sales during the year. In 2010 the Economist Intelligence Unit expects a recovery (to growth of 7-8%) in line with the pick-up in overall economic growth, but registrations are forecast to remain below 15m annually to the end of the forecast period.
This forecast assumes that the Car Allowance Rebate System (CARS, also known as cash for clunkers), which was signed into law in July this year and under which owners of fuel-inefficient vehicles qualify for an incentive of US$3,500 or US$4,500 to trade these in for a more fuel-efficient new vehicle, has only a limited impact on overall sales.
Factors bearing down on growth over the longer term include continued market saturation, a dearth of auto finance at affordable rates for all but the most creditworthy customers, and only sluggish growth in the construction sector. The poor outlook for the US domestic market underscores the need for the Big Three car manufacturers to look to the emerging markets for growth—particularly Asia, but also Latin American and Russia—where penetration is low and sales potential much higher, although the outlook for these emerging markets over the next two years is also poor.
Pricing. The aggressive use of price discounts and cheap financing has been a dominant feature of the US automotive industry. Although this strategy limited the negative impact on sales of sluggish economic growth in 2001-02, its effectiveness has been waning steadily since. Even strong economic growth in 2003-05 and early 2006 failed to have a positive impact on sales, with US carmakers resorting to ever-larger price discounts to entice consumers.
One reason that incentives, such as employee pricing for everyone and cash rebates, and offers of low-rate financing are no longer as effective as they were a few years ago is that customers view them as a normal part of the car-buying process—around 90% of new cars in the US are typically bought on credit. As consumers have grown accustomed to incentives, the main US manufacturers have found it difficult to wind down the special offers.
Item Price (US$) % of monthly personal disposable income Affordability rank
Low-priced car, 900-1299cc (low) 15,300 519.1 2 out of 59
Low-priced car, 900-1299cc (high) 17,230 584.6 2 out of 59
Compact car, 1300-1799cc (low) 15,900 539.5 1 out of 59
Compact car, 1300-1799cc (high) 18,700 634.5 1 out of 59
Family car, 1800-2499cc (low) 26,315 892.9 1 out of 59
Family car, 1800-2499cc (high) 43,470 1,475 1 out of 59
Deluxe car, 2500cc upwards (low) 64,000 2,172 1 out of 59
Deluxe car, 2500cc upwards (high) 90,330 3,065 1 out of 58
Yearly road tax or registration fee (low) 80.00 2.71 1 out of 54
Yearly road tax or registration fee (high) 80.00 2.71 1 out of 54
Cost of a tune-up but no major repairs (low) 226 7.67 6 out of 59
Cost of a tune-up but no major repairs (high) 300 10.18 4 out of 59
Annual premium for car insurance (low) 2,800 95.00 18 out of 59
Annual premium for car insurance (high) 3,800 128.9 15 out of 59
Note. Affordability rank: for each country the price of an item as a percentage of monthly personal disposable income is calculated. Countries are ranked according to these percentages. The most affordable country will have the lowest percentage and be ranked first.
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Supply. Car manufacturing in the US is highly integrated with sister plants in Canada and Mexico; vehicles and vehicle parts constitute the single most important trade flow between the US and Canada. North American output, at 13m units in 2008, accounts for around one-fifth of world production. This was, however, a 16% year-on-year fall. Of this, the US accounted for 8.7m units, and Canada and Mexico for just over 2m units each. Excluding intra-NAFTA (North American Free Trade Agreement) trade, the US does not export cars in huge volumes as GM and Ford have substantial overseas operations to cater to foreign markets.
The automotive distribution structure is built around a franchise system. Principal dealers appoint franchisers who are responsible for the sale and service of a specific brand in a given geographic area. There were some 20,700 franchised dealerships in the US in 2008, according to the National Automobile Dealers Association (NADA), representing more than 40,000 franchise agreements. There had been a gradual process of consolidation in the number of such dealerships since the mid-1980s; the sharp economic downturn, coupled with the travails in the sector more broadly, have, however, accelerated this trend, particularly for GM and Chrysler dealers. The number of dealerships with sales of less than 150 new vehicles per year fell from 8,200 in 1985 to 3,336 in 2008. In contrast, the number of dealerships selling more than 400 new units per year increased from 10,162 in 1985 to more than 12,200 in 2006.
The gross margin on the sale of new units fell by 3% in 2007 to around 5%, according to NADA. This trend has increased the importance of aftermarket income from finance, insurance and service contracts. Aftermarket income was over 28.5% of the gross income from new- and used-car sales in 2007. Automotive manufacturers have used financing schemes to attract consumers, sending the average new-vehicle loan rates by banks and finance companies to extremely low levels. Cash rebates, employee pricing and generous lease options are other incentives that Big Three dealers have used to lure buyers to showroom floors, with only limited success.
The production of passenger vehicles in the US is dominated by the Big Three US firms as well as Honda, Toyota and Nissan from Japan. Stiffer competition from foreign producers (both in the sales of imported cars and in the production of vehicles in US factories) and a collapse in sales have hit the profitability of the Big Three hard. Indeed, GM and Chrysler entered bankruptcy in June and April this year, respectively.
GM and Chrysler have been able to negotiate new contracts with the powerful United Automotive Workers (UAW) union, slash the number of dealerships, cut the number of loss-making brands and close down the worst-performing factories. When the reorganisation of GM is complete, the company will be owned by a combination of the US and Canadian governments, bondholders and the UAW union. Chrysler will be controlled in part by Italy's largest carmaker, Fiat, as well as the UAW union, along with a small stake for the US government.
Assuming a modest recovery in sales over the next two years, both companies are hopeful of a return to profits soon, which in turn would allow the US government, which is now the biggest shareholder in GM, to sell its stake. There are, however, concerns that the administration of Barack Obama, which now in effect controls GM, may be tempted to run the company in a way that supports the president's own agenda on the environment and energy security by encouraging the development of less profitable, fuel-efficient cars, rather than on focusing on returning GM to profitability as soon as possible.
The Big Three's medium-term prospects will continue to be constrained by global overcapacity and downward pressure on car prices. Although these issues affect carmakers worldwide, specific financial problems and a failure to respond to changing consumer demands are weakening the position specifically of the firms. Their competitiveness will continue to be hampered by high legacy costs from generous healthcare provisions for their employees, which do not impede foreign competitors, even those producing domestically.
One particular issue for the Big Three is their reliance on SUV sales to drive underlying profitability; the margins on SUVs are much greater than for cars. With SUV sales now falling after years of growth, the Big Three will find it even harder to succeed in the US market. Moreover, all are now restructuring in an effort to cut overcapacity. The market share of foreign-based (not necessarily foreign-produced) carmakers, particularly Japanese carmakers, will continue to increase at the expense of the US's Big Three.
Alliance of Automobile Manufacturers: www.autoalliance.org
DaimlerChrysler: www.daimlerchrysler.com
Environmental Protection Agency: http://www.epa.gov
Ford Motor: www.ford.com
General Motors: www.gm.com
Honda Motor: www.honda.com
National Automobile Dealers Association (NADA): www.nada.org
Nissan North America: www.nissan-usa.com
Toyota Motor: www.toyota.com
Automotive report: Environmental pressures
Demand. The structure of sales in the US is changing, as the rise in petrol prices in recent years has affected consumers’ buying decisions. Fuel-intensive domestic vehicles are being shunned by consumers, leading General Motors (GM, one of the US Big Three) selling its gas-guzzling Hummer brand to a Chinese firm, Sichuan Tengzhong Heavy Industrial Machinery. This trend towards more fuel-efficient vehicles is likely to continue over the next few years. The government hopes to accelerate this trend through its cash for clunkers scheme, although whether this particular scheme will deliver a lasting change remains to be seen.
The oil price determines close to three-fifths of the price of gasoline (petrol) at the pump in the US, with taxes accounting for one-fifth and refining and distribution and marketing for the rest. In real terms, the retail price of a gallon of gasoline is still close to all-time highs. Nevertheless, the market for light trucks and sport-utility vehicles (SUVs) will remain large, given their integration into many Americans' lifestyles.
In May the administration of Barack Obama announced plans for a set of strict new fuel economy standard rules. Mr Obama’s new rules will bring together a jumble of efforts by various authorities to regulate vehicle emissions and fuel efficiency. The new regulations will require cars to average 35.5 miles per gallon (mpg) and light trucks 30 mpg across a manufacturer’s range of vehicles, to be phased in by 2016. This compares with current corporate average fuel economy (CAFE) standards that were introduced in 1985 and require a fleet average of 27.5 mpg for new cars.
Oil prices and petrol consumption
2004a 2005a 2006b 2007b 2008b 2009c 2010c 2011c 2012c 2013c
Petrol consumption (m tonnes) 396 404 411 416 412 403 404 407 410 415
Oil prices (Brent; US$/b) 38.3 54.4 65.4 72.7 97.7 40.0 50.0 54.5 55.0 50.0
a Actual. b Economist Intelligence Unit estimates. c Economist Intelligence Unit forecasts.
Source: Economist Intelligence Unit.
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Supply. Environmental legislation is forcing firms to invest in more environmentally friendly vehicles. The push by the Obama administration towards greater investment in green technology may also lead to more rapid developments in this area than was the case under Mr Obama's predecessor, George W Bush.
Pressure so far has come mainly from the state level, particularly from California (the state with the highest number of car sales per year). Since 2005, 10% of all cars sold in California must be zero-emission vehicles or low-emission vehicles such as hybrids (electric and petrol drive). Greater environmental awareness, together with high fuel prices and falling costs of hybrid technology, means that such vehicles are becoming more popular (although still accounting for less than 0.5% of all car and light-truck sales in 2008) in the US overall.
The market for hybrid petrol-electric vehicles has also broadened in response to a decline in prices and improving technology. It had been hoped that the expertise gained in this area could prove a competitive advantage for US firms, as other countries adopt more stringent environmental legislation. However, experience to date suggests that foreign manufacturers are ahead of the major US firms in hybrid technology and sales—Toyota (Japan) has captured 60% of the US market and Honda (also Japan) most of the rest. Meanwhile, GM, Ford and Chrysler (the US Big Three) have put a considerable emphasis on the development of flex-fuel cars that can run on both conventional petrol and on E85, a mixture of 85% ethanol and 15% petrol.
On a different track, ultra-low sulphur diesel (ULSD) has become the standard form of diesel in most of the US. The new ULSD fuel emits only 15 parts per million of sulphur, compared with 500 parts for existing diesel. Used in conjunction with the latest diesel engines, it greatly reduces the noise, smell and soot that have to date discouraged many Americans from buying diesel vehicles. The Environmental Protection Agency (EPA) has described ULSD as the biggest advance in clean fuels since the removal of lead from petrol in the 1980s. The introduction of the new fuel has also facilitated the new emissions standards for heavy-duty trucks that took effect in January 2007.
Although sales of diesel-powered cars and light trucks in the US are rising, they still make up less than 4% of the total, compared with almost 50% in Europe. The diesel lobby hopes that interest will grow over the next two to three years with the launch of an array of diesel models equipped with the exhaust-scrubbing technology required to take full advantage of ULSD. JD Power, a consultancy, forecasts that diesels will account for 10% of the US light-vehicle market by 2015, or roughly double the share of hybrid petrol-electric vehicles. The diesel share will nonetheless remain far below that in most west European countries, where it often exceeds 30%.
In return for the stringent fuel economy measures outlined in May 2009 by the Obama administration, California will drop plans to impose its own stringent rules on greenhouse gases. A federal law passed in 1990 gave California the right to set its own standards for car emissions and allowed other states either to follow suit or stick to limits set by the EPA. California's attempts to make cars less polluting had been bitterly resisted by both carmakers in the industry and Mr Bush. In practice, California's rules tend to override milder national regulations, as it is cheaper to follow them than to produce different vehicles, despite the size and importance of the state's car market.
California originally proposed tough emissions targets in 2002 and passed a law in 2004 (since then 13 states and the District of Columbia have said that they plan to adopt the same rules). This was blocked by the Bush administration, which refused to grant California a waiver to federal laws, and was followed by a slew of lawsuits from car companies (which will also now probably be abandoned). But shortly after taking office in January this year, Mr Obama signalled his intentions to make US cars more fuel-efficient by instructing the EPA to reconsider California's application for a waiver
Item Price (US$) % of monthly personal disposable income Affordability rank
Regular unleaded petrol, 1 litre (av) 0.90 0.03 2 out of 59
Note. Affordability rank: for each country the price of an item as a percentage of monthly personal disposable income is calculated. Countries are ranked according to these percentages. The most affordable country will have the lowest percentage and be ranked first.
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Automotive report: Commercial and other vehicles
A major trend of the past 15 years has been the development of the light-trucks segment, which includes pick-ups, multi-utility vehicles (MUVs) and sport-utility vehicles (SUVs). This expanded faster than the passenger car market over the period, with sales of light trucks surpassing those of passenger cars for the first time in 2001. Sales of light trucks peaked at 9.4m units in 2004, or 56% of the total market. Higher oil prices feeding through to petrol prices at the pump have caused the market for light trucks to shrink sharply in 2005-08. As a result of this recent trend in light-truck sales, foreign-based firms are gaining market share at the expense of the Big Three. The trend is similar in the light-trucks segment.
Demand for heavy and medium commercial trucks soared by 31% in 2004, after a precipitous fall in registrations in 2000-02 caused by the economic slowdown, and flat sales in 2003. Sales growth slowed in 2005-06, boosted by moderate GDP growth and the advance purchase of commercial vehicles to beat the new emissions standards that were introduced in January 2007. As a result of this and of severe problems in the construction sector, sales plummeted in 2007 by nearly 32%. This year is expected to be even grimmer—the Economist Intelligence Unit forecasts a decline of 42%. There will be a recovery in subsequent years, but overall commercial vehicle registrations growth is forecast to remain subdued, in line with only sluggish growth in the residential and commercial construction sector.
Commercial vehicle registrations
2004a 2005a 2006a 2007a 2008b 2009c 2010c 2011c 2012c 2013c
Light commercial vehicle registrations ('000) 9,361.0 9,281.0 8,724.0 9,044.0 8,125.8a 5,046.5 5,778.6 6,508.0 7,229.5 8,381.4
Medium & heavy vehicle registrations ('000) 431.6 493.6b 538.2b 365.5b 230.5 134.0 158.4 158.0 169.3 187.6
Commercial vehicle registrations ('000) 9,792.6 9,774.6 9,262.2 9,409.5 8,356.3 5,180.5 5,937.0 6,666.0 7,398.8 8,569.0
Commercial vehicle registration growth (%) 4.7 -0.2 -5.2 1.6 -11.2 -38.0 14.6 12.3 11.0 15.8
a Actual. b Economist Intelligence Unit estimates. c Economist Intelligence Unit forecasts.
Source: Economist Intelligence Unit.
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Automotive report: Components
The US components industry has been hit hard by the financial travails of the Big Three (Ford, General Motors and Chrysler), and by the structural changes within the industry, notably the shift away from large, fuel-intensive vehicles towards more smaller, environmentally friendly products. Indeed, the financial pressures on the industry are likely to force many US parts makers to relocate production to cheaper locations offshore. India, in particular, which is emerging as a cheaper alternative to China, may well benefit from this shift. The swingeing production cuts being implemented by the Big Three suggest a very poor short-term outlook for many US parts makers.
The precarious state of many firms in the sector was highlighted in February this year with a request from the sector for a US$20.5bn bailout from the government—US$10bn of which would come in the form of a direct loan from the government and the remainder to be used to facilitate prompter payments for goods by the vehicle makers. Delphi, one of the largest parts makers, which filed for protection from its creditors under Chapter 11 in 2005, had planned to exit Chapter 11 later in 2009, but the recent failure of rescue efforts suggest that this is now unlikely. In 2009 more key automotive suppliers also filed for Chapter 11 protection, including Visteon, Heyes Lemmerz and Lear, again highlighting the sector's weakness.
Delphi: http://www.delphi.com
Visteon: http://www.visteon.com
I call 8.2mm SAAR next report.
Also, just in case anything wants some scope of the fuel efficiency gains on the current US vehicle fleet, the impact of trading in those clunkers for new "fuel efficient" vehicles should improve fleet-wide MPG to approximately 19.0 mpg to 19.229 mpg, saving us slightly more than $600 million in gasoline purchases on an annualized basis @ $2.50/gal.
I could think of a few better ways to put $3 billion to use...
Without any substantive securitization of these loans happening and no desire for the banksters to provide consumer loans now, the numbers will probably be as you suggest substantially lower than 9.5 million. Plus the idiots ramping production now are creating an inventory bulge going into their slowest months of November, December and January so this will not end well for the dealers if they take on the replacement inventory plus see a rapid decline in sales as projected. We're looking at depression era numbers without this month gang and there is nothing that government can do to fix this except let the system deleverage and sanity return to the banking system.
If, as expected, SAAR runs at or below 9.5 now that the subsidy programs in autos, homes and the like have run their course it will become evident that the hopium of a sustained economic recovery premised upon anything other than pulling future expenditure forward with future tax revenues is simply a mirage induced from chasing the hopium dragon.
OK so td/zh is now in the prediction game. Is that not feature/mission creep?
More of a sideshow. We hope to be within 10 million of the actual number
Put me down for 6 million
The precarious state of many firms in the sector was highlighted in February this year with a request from the sector for a US$20.5bn bailout from the government
good articles; good articles 4 slow news day ..http://www..
hat tip: finance news & finance opinions
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