Industry's Small Car Hopes Fade

[jake75]

Wall St. Journal article 3-23-09.Dealer Inventories at end of Feb. 2009Honda Fit - 22,191 - 125 day supply at current sales rate. (last July it was a 9 day supply)Toyota Yaris - 175 day supply.Dodge Caliber - 205 day supplyChevy Aveo - 427 day supplyThe Fit is an example of how quickly something red hot can become not so hot. Reminds me of the 2001 PT Cruiser - Chrysler couldn't fill all of the orders for the 2001. They cancelled unfilled orders at the end of that model year telling the would be buyers that they would have to re-order a 2002 and pay the increased 2002 price. Within 60 days there never again was any shortage of PT Cruisers. What Chrysler should have done was tell those with unfilled orders that to reward their patience they would be getting a 2002 built for them at no increase in price. Chrysler ticked a lot of people off and I am sure many of them have long memories.

[ColonelPanic]

That sucks... People never learn, do they? Those that can afford to buy in this economy have switched back to fuel sucking pigs again since the price of gas is relatively cheap. And when it spikes up to $4 again (and it will,) they'll once again be a bunch of whiners who are frantically trading in their gas guzzlers for 50 cents on the dollar... Just like they did last year. Pretty dramatic difference. The supplies of small cars and hybrids all but dried up last year... And now we're seeing desparation coming from the mighty Toyota where they had to resort to slapping rebates on the Prius for the first time ever to get them off the lot. Amazing.Oh well, the manufacturer's misfortune is our gain for those of us who like to drive cars that get decent mileage.

[northvibe]

ah these stupid decisions by auto makers is what keeps them in crappy positions.....

[jake75]

Quote, originally posted by northvibe »ah these stupid decisions by auto makers is what keeps them in crappy positions.....Which stupid decisions? Like trying to guess where oil will be next quarter and what vehicles (if any) consumers will want to buy?A lot of really stupid decisions were made in the past 40 years for sure, not the least being letting costs get out of hand, and not recognizing the quality issues. However the final blow was the financial collapse caused by the banking industry that resulted in the precipitous drop in sales volume. They keep on overbuilding vehicles probably because the marginal cost of that extra vehicle is pretty low. On average it might cost $15,000 to produce a vehicle all costs considered, but to build just one more might add only $9,000, One stupid thing - why does GM run these full page newspaper ads when a half or quarter page would be big enough to gain attention and get their point across.

[northvibe]

over production on certain cars, under production on certain vehicles, not researching their future market, not doing enough R&D for newer technology, not investing back into the company, wasting money.

[jimincalif]

Automakers have make a lot of mistakes, but you've got to sympathize with them over gas price fluctuations. Cars have significant lead time and capital investment to bring to market and if gas is going to double in price and then drop by half in a short time span, no way manufacturers can react quickly enough. Someone who might have considered a Honda Fit last year is now looking at SUVs and may be back to considering hybrids in a year or two. Hard to deal with this sort of volatility.

[northvibe]

um...they had well enough lesson form the 1970's to know. Also once honda and other asian cars hit the market and sold like crazy. There is no excuse for american car manf's crappy business practices and cars. The euro ford has MUCH better cars than the american branch. But for 9 years they sell the inferior focus in the US when theres one in europe that is the #1 selling car there. Same with gm and ford cars sold in mexico. They just thought americans only wanted suv's and trucks...which was a horrible assumption. So no sympathy from me when the market, the competition and their other countries branches had the right view on things.. no excuses need to be made for them they are american companies and follow the american way of greed and fat lazyness.. its america thats how businesses work here.

[djkeev]

Quote, originally posted by northvibe »um...they had well enough lesson form the 1970's to know. Also once honda and other asian cars hit the market and sold like crazy. There is no excuse for american car manf's crappy business practices and cars. The euro ford has MUCH better cars than the american branch. But for 9 years they sell the inferior focus in the US when theres one in europe that is the #1 selling car there. Same with gm and ford cars sold in mexico. They just thought americans only wanted suv's and trucks...which was a horrible assumption. So no sympathy from me when the market, the competition and their other countries branches had the right view on things.. no excuses need to be made for them they are american companies and follow the american way of greed and fat lazyness.. its america thats how businesses work here.Ah... the 60's & 70's. It is a period of time that the youth of today look upon with great envy and wish if only they had lived then. Let me tell you, the 70's basically SUCKED. War, social unrest, murder of public figures, riots at universities, racial tension, uneasy oil supply and then the part that has been romanticized that the youth of today sees, (removed), drugs and rock and roll. I lived it, I survived it but it isn't unlike looking back upon the Great Gatsby era and saying... if only.....It wasn't an assumption that people wanted big cars. The people voted that they wanted big cars with their wallets and BOUGHT big cars. They left the little economy cars to almost be a niche market. This was to such an extent that even the traditional small car manufactures (Toyota for one) started making gas guzzling monsters just so they too could cash in on the gravy train!Industry will NOT make what people DO NOT PURCHASE. Examples of this could fill this forum to band width capacity. Europeans by and large purchase and want small fun cars. We here in the land of excess purchase excess.For example.....nothing to do with cars....If people stopped drinking coffee and instead switched over to drinking tea do you think Dunkin Donuts would continue to brew copious quantities of coffee every morning? (the answer is no, they'd mass brew tea instead)What people purchase dictates what industry manufactures.PS the Asian cars did NOT sell like crazy once they hit the US market. It was a long uphill battle, indeed helped by the 70's oil embargo. Do you remember Honda's first US car?? It was a complete piece of crap, not really sure if it was mostly car or mostly motor cycle! and it is a miracle that people not only purchased it but went back for more as models were introduced.The first Toyota's were ugly and strange cars indeed. The Early Land Cruiser was basically a Chevy straight 6, some parts even interchanged the copy was so exact.Datsun didn't start with a flash either but beat their way into the US market with some brillant style and technology that is revered even today. (fairlady, 240 Z) Datsun did feel the need to reinvent themselves into NISSAN back in the late 70's early 80's.Mazda, the rotary engine?!? great concept but......Subaru, the water cooled VW Pan engine, noisy piece of crap!Renault, Yugo, British Leyland's entire fleet, FIAT, DeLorean and many many many others tried their hand in the US market and went home severely beaten or simply gave up because playing here with our rules was a "hard" and expensive thing to do.We as Americans, in some ways define Fat and Lazy. In other ways we are historically hard working resourceful and intelligent. We built the greatest standard of life ever seen upon this planet.... We invented and produced many of the major technologies used in the world not only today but in the past century, That is why the world hates us, jealousy over what we have attained and done.Dave

[scherry2]

Dave.well said.

[Silversn95]

Quote, originally posted by scherry2 »Dave.well said.X2Don't let northvibe get under your skin when it comes to his comments on the auto industry. He has posted enough on this site to show he doesn't have a clue how it works. As for the supply of small cars, how does this surprise anyone? Gas is cheap and the north american consumer prefers larger vehicles(despite what north vibe believes). Those vehicles now are more affordable than ever with the deep discounts out there just to move cars, any cars, off the lots.And why this misconception that EU prefers smaller cars? Don't you guys realize this has more to do with the regulations, taxes placed on larger vehicles and the high price of fuel, making them less attractive (i.e. affordable) to the consumer? I'm sure if we had similar tax laws to EU then our buying trends would follow suit, but who wants that?I'm sorry to say but this evidence is backing-up one of my predictions that if gas prices stay low then all the billions currently being spent on fuel efficient powertrains is going to go to waste as those cars will not sell when they make it to the market in the next 2-3 yrs. Maybe we need some form of regulation on fuel prices to ensure the industry will survive. Maybe we will be lucky and the economy will recover by then, driving the price of fuel back up. I really hate to say it (since it will likely cost me more money) but putting regulations in place now will ease the pain in the coming decades when we won't have a choice if the planet runs out of oil (I'm sure there is a debate on this as well).

[jake75]

Taxes are a legitimate way to influence behavior. Tobacco and alcohol are taxed in part todiscourage use. During WWII there was a 10% federal sales tax on jewelry and cosmetics(even deodorant - something one might think ought to be encouraged) in part to discourageconsumption of materials needed for the war effort. That lasted long after the war was overwhen it was just for revenue. Mortgage interest is deductible to encourage home ownership(maybe that was a mistake, huh). Energy saving home improvements have from time to timebeen encouraged with tax credits. The State of Ohio lets us deduct our Long Term Careinsurance in the hope that we won't have to rely on Medicaid in our old age.So a gas tax to encourage people to drive more fuel efficient vehicles would be logical. Proposals to do this have met wide criticism even though they were accompanied by anoffsetting tax credit covering the tax cost of a modest amount of gasoline. This does hurt aperson who has to drive a long distance to work but it might encourage people to move closerto their job.I am not an engineer but the energy benefit of electric and hydrogen powered vehicles hasalways escaped me. It takes energy in the form of coal, natural gas, oil etc. to makeelectricity, and the process is not all that efficient. The nuts in this country don't want nuclearpower (safer than Ted Kennedy's car as one nuclear advocate's bumper sticker read). I don'tknow where they expect to get all that hydrogen. True, water is 2 molecules of hydrogen andone of oxygen, but it takes energy to covert water to hydrogen and oxygen - as much or moreenergy than is produced when you burn hydrogen, a process that turns it back into water.Pumping carbon dioxide into the ground also seems like trying to empty the ocean with ateacup. Why not encourage the planting of a billion trees - wouldn't they soak up a lot ofcarbon dioxide?Wind energy seems to make sense - but you can't put it where it would spoil the view of thelikes of Ted Kennedy.Sorry to be picking on Ted Kennedy but he (and Al Gore) is such an easy target.

[Houston]

Quote, originally posted by djkeev »We as Americans, in some ways define Fat and Lazy. In other ways we are historically hard working resourceful and intelligent. We built the greatest standard of life ever seen upon this planet.... We invented and produced many of the major technologies used in the world not only today but in the past century... Dave I'm thankful to have worked and retired during this country's greatest years and certainly don't envy you young folks who have most of your working years ahead of you.No country stays on top forever. It seems we're witness to the torch being passed to the next world leader. The USA is quickly going down the tubes. Nothing ever stays the same.

[michaelgt]

Since northvibe is such an expert, I hope he has applied for a job with the automotive task force! That way he can ensure that we all get the vehicles that we want!!(And also demonstrate that he is not lazy and willing to work long hour days and weekends for government wages!)

[KNINE]

Quote, originally posted by jake75 »Taxes are a legitimate way to influence behavior. Tobacco and alcohol are taxed in part todiscourage use. I disagree with any punitive tax. Taxes should not be used a weapon to discourage or punish any behavior. If you don't want people to engage in a behavior, or use a product, make it illegal.

[northvibe]

Americans were groomed into wanting big trucks and vehicles this wasnt a need. it was BECAUSE gas was cheap this was done. I never said they were not popular I said they were wasteful imo because once gas gets to high everyone tries to dump them. then the cycle continues....So when $4 per gallen happens again and it will because we love to speculate, then big vehicle sales will drop... This is why I will never post about this again, as some people are close minded and think just like the oil/big 3 do...

[jake75]

Quote, originally posted by K-NINE »I disagree with any punitive tax. Taxes should not be used a weapon to discourage or punish any behavior. If you don't want people to engage in a behavior, or use a product, make it illegal. Like that has worked with drugs or prostitution.

[jake75]

Hey - I respect your views. I just think l there is more than enough blame to go around. As they say, it all depends on whose ox is being gored - or something like that.

[KNINE]

Quote, originally posted by jake75 »Like that has worked with drugs or prostitution.I never said people wouldn't commit crimes.

[Whelan]

Time to buy me a Hummer, whoop!Nope, next car is most likely gonna be a Jeep. A nice new white Liberty Limited with sky roof and leather. mmmmm.