Tuesday, February 3, 2009

Automobile Sales Plunge In January

The continuing severe sales declines have hit the automakers like a January snow storm. These numbers are the percentage of sales this year versus last year. Consumer confidence has taken a steep decline. Consumers are concerned with the economy, job losses and their ability to make payments. Consumers ability to get loans have also factored in the sales declines.

  • Chrysler's down 55%
  • General Motors down 49%
  • Ford down 40%
  • Toyota down 32%
  • Nissan down 30%
  • Honda down 28%

There were positive reports from two manufacturers. Hyundai has a creative incentive for its customers. Hyundai will cover a new vehicle's depreciation if customers return a car within 12 months because they are unable to make payments due to a job loss etc.

  • Hyundai up 14%
  • Subaru up up 8%

GM and Chrysler are required to submit a viability plan to congress by Feb. 17 in order to get additional financial aid from the government. The automobile business is a capital intensive business and severe sales declines impact their ability to operate. The American auto manufacturers are not currently well capitalized. Few businesses can take severe sales declines without a substantial balance sheet and the cash to endure this downturn.

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