Miserable Numbers From Detroit

Got to at least mention the car sales numbers. They were abysmal but maybe not far off what we can expect for the foreseeable future.

Here are the numbers:

Ford Down 30%
Chrysler Down 35%
GM Down 45%
Toyota Down 23%
Honda Down 28%

Overall sales were 838,165 cars which translates into a seasonally adjusted annual rate of 10.6 million vehicles. The industry considers 16 million vehicles a year as healthy.

Let's stipulate that these numbers reflect sales in an extraordinarily rough period. That being said, the idea that the industry will soon see 16 million unit per year sales in the near term is a pipe dream. The sea change in the credit markets is going to put a crimp on sales for some time to come. In my opinion 12 million to 13 million sales per year are going to become the norm.

In that environment, the industry has to rationalize itself. There is simply too much capacity and someone has to merge or fail. We are probably going to go through a period of denial and government assistance before the music is faced. But faced it will be sooner or later.

Tom Lindmark