It was a mere two weeks ago that we were predicting a collapse in the September auto SAAR, not only with the push-forward effect of Cash for Clunkers expiring, but after Chrysler and GM reported even August sales that were below forecast. Yet based on a speech by Chrysler boss Sergio Marcchione at the Frankfurt Auto Show, even the "conservative" 9.5 million SAAR that we estimated for September, after the 14.1 million number in August, is going to be an optimistic number. The Fiat/Chrysler boss warned that "we are going to see harsh reality in September." According to Bloomberg:
Chrysler Group LLC, the U.S. automaker run by Fiat SpA, said nationwide industry sales are off 19 percent so far this month after a government purchase- incentive program ended.
Light-vehicle sales in the U.S. last September ran at a seasonally adjusted annualized rate of 12.5 million, which was the lowest since March 1993. A 19 percent decline would equate to a 10.1 million annual rate, higher than any of the first six months of 2009.
Even GM's Fritz Henderson has thrown in the towel, saying that September will be a "very weak" month. And as for that 10.1 million SAAR, we are happy to take the under.
We are not sure yet how the MSM will prepare the public for the collapse that is now expected in auto sales when they are reported in the first days of October. The bigger surprise is why the auto industry is not following in the footsteps of Senator Isakson and demanding not only yet another extension to Cash For Clunkers, but also an expansion. At this point there is no point in the government pretending it is not subsidizing any and all industry. As David Rosenberg and other economists have speculated, the government accounts for 80%, if not more, of all the "growth" experienced in the economy. The issue is that, as any first year analyst at an investment bank will attest, all such comparable stimuli are considered "non-recurring" unless of course, they become, "recurring." But at that point the economy is effectively one based on central planning: the key construct in any Communist/Marxist economic model. Which, (un)fortunately, is where the US is now and will be for an indefinite amount of time.