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Crushing The Auto-Makers' Dreams (In 2 Depressing Charts)
Earlier this morning we got another glimpse of reality behind the smoke-and-mirrors, mainstream-media-sponsored last-pillar-standing lovefest that is US auto sales when the business sales data showed a disheartening tumble in sales in October. So where are all the sales going that automakers report? The answer is simple... (and painful).
As Alhambra Investment Partners' Jeffrey Snider notes, a good part of the national imbalance (of inventories to sales) has been the sudden, and very sharp, surge in the accumulation of unsold motor vehicles.
If there were to be a final nail in the recovery and the narrative that tries to support it still, it would be a shutdown in auto production and sales that have been perhaps the largest single element boosting the economy to this point (which tells you how bad the rest of the economy has been since it “needed” dramatic auto gains, via debt debasement, just to eke out a plausible upward track). The inventory-to-sales ratio in autos in October was 1.77, seasonally-adjusted. That is above the 1.76 in August, thus now the highest since July 2008 (on the way down).
In the unadjusted series, the 1.74 ratio for October was a massive increase from 1.53 in October 2014. In fact, October’s level of inventory is so far out of historical alignment that it is only close in comparison to October 2008 – dating back to the series’ inception in 1992.
The only conclusion that can be drawn from all this is one that adds up to looming recession, far more than what has already been seen so far. The inventory imbalance has drawn on far longer than any historical precedence (especially compared to recession cycles before 1990) and has spread throughout the “goods economy” to even infest autos. There must be an adjustment at some point, as businesses cannot finance and hold inventory for Janet Yellen’s sake. I have to believe that they have been giving economists the benefit of the doubt in that concern, nervously expecting and awaiting the fairy tale to come true. Both the inventory imbalance and the persistent and lingering contraction in sales (or at least a dramatic slowing in some industries, apparently including now autos) risks an eventual economy-wide (given how widespread the inventory problem has become now) re-alignment; i.e., full recession. At this point, there is no “if” but rather “when” and, more importantly with inventory to such a great degree, “how much.”
I think that is where the comparison to the dot-com recession is relevant; we already have a contraction in sales worse than that entire period and still no inventory resolution. Quite the opposite, actually, as inventory has spun up to levels only seen just prior to the Great Recession’s full weight.
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The last time this kind of inventory-to-sales crapfest occurred, we noted the world had become a parking lot... Where the World's Unsold Cars Go To Die (courtesy of Vincent Lewis' Unsold Cars)
Above is just a few of the thousands upon thousands of unsold cars at Sheerness, United Kingdom. Please do see this on Google Maps....type in Sheerness, United Kingdom. Look to the west coast, below River Thames next to River Medway. Left of A249, Brielle Way.
Timestamp: Friday, May 16th, 2014.
There are hundreds of places like this in the world today and they keep on piling up...
THE WORLDS UNSOLD CAR STOCKPILE
Houston...We have a problem!...Nobody is buying brand new cars anymore! Well they are, but not on the scale they once were. Millions of brand new unsold cars are just sitting redundant on runways and car parks around the world. There, they stay, slowly deteriorating without being maintained.
Below is an image of a massive car park at Swindon, United Kingdom, with thousands upon thousands of unsold cars just sitting there with not a buyer in sight. The car manufacturers have to buy more and more land just to park their cars as they perpetually roll off the production line.
There is proof that the worlds recession is still biting and wont let go. All around the world there are huge stockpiles of unsold cars and they are being added to every day. They have run out of space to park all of these brand new unsold cars and are having to buy acres and acres of land to store them.
NOTE:
The images on this webpage showing all of these unsold cars are just a very small portion of those around the world. There are literally thousands of these "car parks" rammed full of unsold cars in practically every country on the planet. Just in case you were wondering, these images have not been Photoshopped, they are the real deal!
Its hard to believe that there are so many unsold cars in the world but its true. The worse part is that the amount of unsold cars keeps on getting bigger every day.
It would be fair to say that it is becoming a mechanical epidemic of epic proportions. If anybody from outer space is reading this webpage, we here on Earth have too many cars, why not come and buy a few hundred thousand of them for your own planet! (sorry but this is all I can think of)
Below is shown just a few of the 57,000 cars (and growing) that await delivery from their home in the Port of Baltimore, Maryland, U.S.A. With Google Maps look South of Broening Hwy in Dundalk for the massive expanse of space where all these cars are parked up.
The car industry would never sell these cars at massive reductions in their prices to get rid of them, no they still want every buck. If they were to price these cars for a couple of thousand they would sell them. However, nobody would then buy any expensive cars and then they would end up being unsold. Its quite a pickle we have gotten ourselves into.
Below is shown an image of the Nissan test track in Sunderland United Kingdom. Only it is no longer being used, reason...there are too many unsold cars parked up on it! The amount of cars keeps on piling up on it until its overflowing. Nissan then acquires more land to park up the cars, as they continue to come off the production line.
UPDATE: Currently May 16th, 2014, all of these cars at the Nissan Sunderland test track have disappeared? Now I don't believe they have all suddenly been sold. I would guess they may have been taken away and recycled to make room for the next vast production run.
Indeed next to that test track and adjacent to the Nissan factory, they are collating again as shown on the Google Maps image below. So where did the last lot go? This is not an employees car park by the way.
None of the images on this webpage are of ordinary car parks at shopping malls, football matches etc. Trust me, they are just mountains and mountains of brand spanking new unsold cars. There is no real reason why you should be driving an old clunker now is there?
The car industry cannot stop making new cars because they would have to close their factories and lay off tens of thousands of employees. This would further add to the recession. Also the domino effect would be catastrophic as steel manufactures would not sell their steel. All the tens of thousands of places where car components are made would also be effected, indeed the world could come to a grinding halt.
Below is shown just a small area of a gigantic car park in Spain where tens of thousands of cars just sit and sunbathe all day.
They are also piling up at the port of Valencia in Spain as seen below. They are either waiting to be exported to...nowhere or have been imported...to go nowhere.
Tens of thousands of cars are still being made every week but hardly any of them are being sold. Nearly every household in developed countries already has a car or even two or three cars parked up on their driveway as it is.
Below is an image of thousands upon thousands of unsold cars parked up on a runway near St Petersburg in Russia. They are all imported from Europe, they are all then parked up and they are all then left to rot. Consequently, the airport is now unusable for its original purpose.
The cycle of buying, using, buying using has been broken, it is now just a case of "using" with no buying. Below is an image of thousands of unsold cars parked up on an disused runway at Upper Heyford, Bicester, Oxfordshire. They are seriously running out of space to store these cars.
It is a sorry state of affairs and there is no answer to it, solutions don't exist. So the cars just keep on being manufactured and keep on adding to the millions of unsold cars already sitting redundant around the world.
Below are parked tens of thousands of cars at Royal Portbury Docks, Avonmouth, near Bristol in the United Kingdom. If you look on Google Maps and scan around the area at say 200ft you will see nothing but parked up unsold cars. They are absolutley everywhere in that area practically every open space has unsold cars parked up on it.
Below is that same area in Avonmouth, UK, but zoomed out. Every gray space that you see is filled with unsold cars. Anyone want to hazard a guess at how many are there...
As it is, there are more cars than there are people on the planet with an estimated 10 billion roadworthy cars in the world today.
We literally cannot make enough of them. Below are seen just a few of the thousands of Citroen's parked up at Corby, Northamptonshire in England. They are being added to daily, imported from France but with nowhere else to go once they arrive.
So there they sit, brand spanking new cars, all with a couple of miles on the clock that was consummate with them being driven to their car parks. Below is the latest May 2014 Google Maps image of unsold cars in Corby, Northamptonshire.
Manufacturing more cars than can be sold is against all logic, logistics and economics but it continues day after day, week after week, month after month, year in year out.
Below is shown a recent (April 2014) screen grab from Google Maps of the Italian port of Civitavecchia. All those little specks are a few thousand brand new unsold Peugeots. Just collecting dust and maybe a bit of salty sea spray!
Below, all nice and shiny but with nowhere to go. Red and white and black and silver, purple, pink and blue, all the colors of the rainbow and be they all brand new. Indeed all the colors of the rainbow are down there on those cars, making pretty mosaics, montages of color and still life. Maybe that is all they will now ever be, surreal urban art of the techno production age. Magnificent metal boxes, wasting space and saving grace, all sitting still, because its business at mill.
All around the world these cars just keep on piling up, there is no end in sight. The economy shouts out quite loud that nobody has the money anymore to spend on a new car. The reason being that they are making their "old" cars go on a lot longer. But we cannot stop making them, soon we will run out of space to park them. We are nearly running out of space to drive them that's for sure!
Below, more cars mount up in the port of Valencia in Spain. They will not be exported as there is nowhere for them to go, so they just sit and rot in their colorful droves.
Gone are the days when the family would have a new car every year, they are now keeping what they have got. It may be fair to say that some families still get a new car every year but its the majority that now do not.
The results are in these images, hundreds of thousands if not millions of cars around the world are driven from their factories, parked up and left.
Could we say that these cars have been left to rot! Maybe, as these cars will certainly rot if they are not bought, driven and cared for. It does not look like they will be sold any day soon, many of them have been standing for over 12 months or even longer and this is detrimental to the car.
Below, as far as the eye can see, right into the background, cars, cars and more cars. But what's beyond the horizon? Have a guess...Yes that's right...even more cars! All brand new but with no homes to go to. Do you think they will ever start giving them away, that may be the only radical solution. Who knows, you could soon be getting a free car with every packet of cornflakes.
When a car is left standing idle, all the oil sinks to the bottom of the sump, and then corrosion begins to set in on all the internal engine parts where the oil has drained away.
Cold corrosion is when condensation builds up in the cylinders and rust forms in the bores. The engines would then start to seize and would need to be professionally freed before they could be started. Also the tires start to lose air and the batteries start to go flat, indeed the detrimental list goes on and on.
So the longer they sit there the worse it slowly becomes for them. What is the answer to this? Well they need to be sold and that just isn't happening.
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Are we going to see this all over again?
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Tiiiiiiiiiiiiiiimber.
I read this article 2 years ago wow the stories are reproduced and nothing changes
...Just like the stock "market," right? I lost big going short that shitshow, but it goes on and on and on...
What?!!! You don't have one in stock with the large cup holder on the left and dual controlled cigarette lighters? I'd have to special order it? It'll take 6 months?
Nah, I'll walk, thanks. No I won't pay you $87,000 if it's delivered tomorrow. No, I don't care if it's got 47 Intel Pentium Zabillion chips. No, I don't care if you'll give me a $100 coupon good on a windshield sticky compass. No. Leave me alone, Goddammit! Stop grabbing me. Oh, you don't like that Tazer?
I enjoy my daily dose of fear-porn too, but c'mon. Some of these photos show a yellow shuttle bus delivering people to their cars. I call BS on some of the pics.
My 1996 Volvo 850R is running GREAT. The gangstas love my car and leave me alone.
A word of warning to those who will lend an ear. Ostentatious displays of wealth will become very very passé when TSTF...
Spoctor Din
Krugman Approves!
FORWARD SOVIET GEAR!
duplicate
A free one for every immigrant. We just don’t have their vision.
Wow! what an awsome massive art project you could make with all those unsolded cars. How about the worlds largest smilely face that can be seen from space?
Or spell out on a runway using parked cars: "on a long enough timline, the survival rate for everyone drop to zero".
Will Banzai are you reading this? :)
Not sure, I see alot of coons driving new 60k caddies overe here and then pull into apartments.
Their 'pit's' probably have SS#'s and are on public assistance.
You always see the best rides in the shitiest neiborhoods.
That's why they are in the ghetto, and usually stay there for generations.
Shit - coffee just went up my nose....
++++++++++++++...!!!!!!!!!!
how many times have these photos been recycled?
Probably not as many times as the steel, plastic and other materials used to build these automobiles have been recycled.
Please ZeroHedge I am having quadruple (at least) déjà vu with these pictures.
maybe year after year the cars are still there?
well...Snopes says there cars are awaiting shipping/delivery, says the unsold car story is false.
Newly manufactured automobiles are produced according to a schedule based on anticipated demand, and they have to be stored somewhere while awaiting transport to and from ports via truck, ship, or train to dealerships (both within the country of production and abroad). Just because vehicles are temporarily parked en masse for storage purposes doesn't mean they're doomed to remain forever unpurchased and sit outside until they deteriorate and are scrapped while manufacturers continue to churn out more and more new cars. The Avonmouth and Royal Portbury Docks (also known as Bristol Port), a facility shown in many of these photos, handles over 700,000 motor vehicles per year for import, export, and finishing. Given that volume, at any particular time there are likely to be thousands of automobiles parked there waiting to be loaded (or just having been unloaded) and transported to their final points of sale.
Long Crushers.
Problem with that is that scrap is worth zilch right now. Junk cars are fetching $50 if you're lucky. The commodity slide is really taking a toll on the recycling companies. I think we'll go back to where we were in the late 90s where junk cars weren't worth anything.
Anyone who didn't see this coming wasn't paying much attention. The photos might be recycled but only because the situation is getting worse.
Reminds me of Chrysler back in the early 80's when their parking lots were packed full of unsold crap that couldn't be sold. I assume it all finally got squished.
Yes, but they have to manage supply, right? A flood of 'new' 1-2 year old vehicles would CRUSH the new vehicle market.
This reminds me of the housing "market," where millions of foreclosures have intentionally been kept out of the market.
Well at least zog figured out what to do with all the new Toyotas...
What a waste
Trust me, the Peugeot s are better off parked.
But But But.. the news is saying car sales are fabulous this year.
Just wait for the bigger cash-for-clunkers #2.
Subprime defaults going to pile up.
In my home-town on the shore in CT...over the past 3-4 years... businesses have been shuttered and buildings have been raized to make way for ......
parking lots. Yes, it's true, on the Boston Post Road (Route 1).....parking lot after parking lot...filled to the brim with cars.
Something s fishy here. Wouldn't tearing down an existing building that is still in reasonable and serviceable shape be a detriment to the local property tax base?
DO NOT CLICK ON ANY LINKS IN THE ARTICLE.... SPAM!!!!!
BTW, ZH you should be above this. Those "parking lot" photos have been shown to be car shipping staging areas in the past.
So many people could use new wheels including me. Car values would drop immediatley and associated Govt.Ad Valorem taxes if we had access to these cars. Ashame
The field are sown, comrade!
'Twill be a bountiful harvest this year, comrade!
Homeland Security must be taking a break from buying tons of new trucks and cars with our money so that their sub 100 I.Q. brainwashed 'Officers' can arrogantly go ordering us around due to some phony threat staged by their bosses.
Really... how much of this now, near state industry, is being propped up with bloated government purchases while the average American often struggles to afford a reliable vehicle?
Fuck the popups Tylers.
Ad Block Plus is your friend
I am sure Tyler doesnt agree...
Doesn't work out on the tablet platforms, i hear.
Adblock is available for Android tablets and phones by using a local host to block ads. Sorry for you iTards, though.
Saw a local Hyundai dealer that has about 20 new 2013 models for sale. Offering a $3K discount for a 3 yr old car? Try $10K
Did this just now. Went to Bing Maps and looked up a small dealer ship I drive by every month or so. Bing image dated Sept 2010 and the dealership had 122 vehicles on the lot. Google maps image is dated 3/21/14 and the lot has been pushed out into the field to the west and south and has approximately 100 more vehicles. Count went from about 100 to over 200. 50% increase in inventory.
It's easy for the car manufacturers to clear that inventory, just give bigger discounts, with 0% loans and those cars will all be gone. Or rather, forget the discounts, that's not how cars are sold.
Dealers don't sell cars, they sell MONTHLY PAYMENTS. All the manufacturers need to do is reduce the monthly payment, with whaterver black magic they want to use, and all those care will be gone in a few weeks.
In the US, something like 85% to 90% of all new cars are financed......
The other scarry number is that car loans are no longer the standard 36 months of years gone by. This year, only 4% of car loans are that SHORT. The average of all car loans is now 67 months
"In the US, something like 85% to 90% of all new cars are financed"
Probably higher, With the exception of myself, everyone else I know has car loans.
" This year, only 4% of car loans are that SHORT. The average of all car loans is now 67 months"
I'll buy that. Cars sales for 2015 was driven by a combination of longer loan durations and subprime loans.
Sheerness seems nice. Small town with a big golf course. Nice port, decent industrial base. Yeah, they have a lot of cars because that's where they come in. Apparently they have a lot of garden gnomes too. ;)
It is simple really. Wherever the “credit “ firehose is aimed, it will distort that sector.
For example, during the housing bubble, bank credit aimed at FIRE. Finance, Insurance and Real Estate colluded to aim credit at housing. This caused a bubble in that sector.
Since housing is relatively in-elastic, that caused prices to jump faster than supply. Money as demand chasing fixed supply causes high prices. This was especially true in land-locked areas where new inventory could not come on line, for example Islands or already built out locales.
The credit firehose is now aimed at Auto’s and Student Loans. In the case of Auto’s, automakers react to money as demand, and then produce more. Supply ramps up to meet “credit as money” as demand.
Humans cannot helps themselves, as they respond to money and prices, in the same way a fish responds to salinity and heat while swimming in water.
The fix to the shit-show is to change money from bank credit to law-based wealth.
Money needs to circulate in proper pathways/channels to meet true demands. Proper money also needs to not take rents for its right to exist.
The double entry ledger always demands something fungible in order to create credit. Bubbles in auto loans harness the future with debts at the expense of today. The money type is high friction, high cost, taxes the future, and channels in ways that are not productive. Debts against something declining in value while debts grow with usury, is especially odious economics.
Credit as money should NOT aim at consumption goods. Credit should only be a small percentage of money supply and aim at items that improve productivity.
Stupid humans.
www.sovereignmoney.eu
My 1996 Monte Carlo has 230k, new tires, and battery. Car is good for another 10 years before I need a new used vehicle. Frankly, I would gladly scrap it for a new GMC Sierra with all the options, Mr. General Motors CEOdude.
Get some wrenches and a few technical tools and keep the shitmobiles running. No one can reasonably pay 60K for a new car. Even if you are a millionaire you just wiped out a 6% of your so called wealth if you pay cash for one. Fuck that idea. I have a couple of nice vehicles. No doubt of that, but I also have some junk that I keep running and use on a regular basis. Mileage eaters is all they are and one is deployed as we speak. Cash for clunkers? I pay cash and make the damned thing run again. In a way I hate it but it is a good idea.
I have junk cars everywhere. I really do not care and not a one of them has a loan on it. Who really gives a shit what you drive? Does it run and drive? Maybe the vehicle is not perfect but who cares? I only need the vehicle to do it's intended job and mine do that quite well. Mostly I drive the junk around and I don't owe debt on the damned things. If it bursts into flames I can still get $250 in scrap metal. Fuck that car, I will just get into the next piece of shit and run that into the ground too and then go buy another piece of shit for cheap.
There can only be so many things that go wrong with a car. Most of it is emissions related these days. Fuel injection is great but there are so many sensors anymore. If one of of those bastards goes full retard on you it will fuck with the computer and fuck up the fuel/air mixture. Cars these days have these sensors both upstream and downstream meaning that there will be probably at least two O2 sensors on the intake and at least one on the exhaust somewhere. It is a thrill a minute to clean/replace that crap. It doesn't work anyway. Jeebus Crispun.
Give them away. That should increase gasoline demand, therefore it will boost the economy in general and will support oil prices. (</sarc>, just in case).
For years, the local Chrysler dealer had a large grassy area in front of the dealership. Now, all the grass is covered with new cars right out to the street. Must be a nightmare trying to get a car out of the middle of that mess. Once the snow hits, it's really going to be interesting. Where will they put the snow? Maybe just leave the cars buried 'till spring?
Lol don't get a chrysler even if they give 'em out for free. Worst piece of shit cars I've ever driven.
It'll be feral dogs stalking you.
Elk are smarter than to go to NYC from rural PA.
and in the death, as the last few corpses lay rotting on the slimy thoroughfare..................high on poachers hill, the red mutant eyes gaze down on hunger city. no more Big Wheels. ................any day now, the year of the diamond dog.
"The last time this kind of inventory-to-sales crapfest occurred, we noted the world had become a parking lot... Where the World's Unsold Cars Go To Die (courtesy of Vincent Lewis' Unsold Cars)."
Hmm. I clicked on the "Vincent Lewis' Unsold Cars" site link. What is this sh_t? If that link is cited as a source for news, ZeroHedge must have replaced Tyler with some old Dell desktops running infected algorithms.
Maybe just a few of those car park photos are faked, too, no?
This article seems to have been a bad AI (artificial intelligence) experiment gone awry.
In Germany the surplus cars are registered for one day (just to be counted as sold for the statistics as well as balance sheets) and after a year or two taken appart for spare and production parts. Assembly is just so cheap nowadays, that the losses are small. Those parking lots are just giant warehouses.
I'm seeing bull shit mixed with truth.
I've seen those same photos last year.
For instance I'm seeing lease cars return cars being offered at rather high prices. On the other hand I see a local Toyota dealer offering a dealer supplied after market extended power train warranty, it looks like they are trying to get rid of inventory to me.
A new car for many people equals their annual salary. So sure, there's plenty of money for a car, lol. With all the extras added in the gov requires, the costs can only go higher, because they never stop thinking of stupid things to add.
Manufacturers know it's coming because they are all in on it...after emp kills all our cars whoever has any money is gonna want a brand new whip...price just tripled.
The cars are probably awaiting extremely large ships to carry them wherever so you would need to have them ready to load to keep the ships in port for the minimum time.
As far as buying cars one idea that has worked for me is to get a three year old used car from the dealer with the manufacturer's warranty and drive it unti the costs to repair it is greater than it is worth.
Artlicle from 2/2015. Says a slight decline in price due to increased inventory.
http://www.detroitnews.com/story/business/autos/2015/02/16/used-car-pric...