If your current vehicle has reached the clunker stage, as mine did earlier this year, you may have to go shopping, despite the gloomy economy and hideous gas prices. Financing can be a problem if your credit is less than pristine, but automakers, most with high inventories at the end of the 2008 model year, are ready to deal.
First, let’s look at General Motors, the Detroit auto giant whose July 2008 sales were off 26%. Sales of small cars actually rose while truck sales plummeted, probably thanks to the burning issue of gas mileage. Pension plans and expensive union contracts are apparently a burden for a company which is actively seeking to retool in the face of intense consumer demand for fuel efficiency. Most recent profits are due to overseas operations, although “profits” may be a relative term for a company that lost $39 billion worldwide last year. This maker of Buicks, Cadillacs, Chevys, Hummers, Pontiacs, and Saturns has plants in 35 countries besides the U.S.
Toyota with Canada rotors, second in sales in the U.S., also reported a decline in sales for July, but its sales of hybrid vehicles remain steady. This Japanese car manufacturer, known for its popular Lexus and Toyota brands, has five U.S.-based assembly plants and is engaged in joint ventures with GM and Subaru. A new plant is scheduled to go online in Mississippi in 2010.
Ford, the Dearborn MI-based maker of Ford, Lincoln, Mercury brands, also experiencing sales difficulties this summer, is planning to curtail R&D costs by collaborating with GM on new engine technologies. A new smaller Mercury model is said to be in the works for 2010. The company, in what may be a trend, is also trimming dealerships to cut costs.
Chrysler, based in Auburn Hills MI, recently a subsidiary of Germany’s Daimler auto company and now re-spun-off under Cerberus Capital Management of New York City, has the worst recent sales record, with some experts citing quality issues as the chief problem. Still, there are many fans of Dodge, Jeep, and other Chrysler brands.
So, if you need a car, what should you do? Seek out local sales for sure, but also do some research on particular vehicle statistics, like gas mileage, safety, and recall notices. Know that this a buyer’s market, especially if you can pay cash or handle financing arrangements. If you own auto stocks, you’re likely in for a bumpy ride for the foreseeable future.