Saturday, February 28, 2009

Automotive industry continues a slow death

J.D. Power and Associates Reports that U.S. Light-Vehicle Retail Sales in February are down by nearly 38% from one year ago. GM and Chrysler LLC are receiving TARP money from a government bailout. The suppliers for the US auto companies are not getting any assistance. Many are facing a tight cash flow that could force them into bankruptcy. They have high priced materials (like steel) in their supply chains. Many have significant inventories of goods. While car sales have declined 38%, demand for auto parts for some vehicles have declined even more. Almost every vehicle is now over the desired 60 day dealer inventory window. Very low sales and high priced materials in the supply chain may force many auto suppliers bankrupt. This could lead to a domino effect of prolonged auto manufacturing plant shutdowns. The Obama Administration needs to stimulate car sales this year. Unfortunately, there is nothing in the works that will accomplish that goal. Here is an AP video highlighting the difficulties of one auto parts supplier.

First Person: Auto woes roll down to parts maker(AP)

The struggles of the Big Three auto makers means worry at a range of suppliers making the raw materials going into vehicles, suppliers like FormTech Industries in Royal Oak, Mich. (Feb. 27)


Anonymous said...

Stimulating American demand is the dumbest thing we could do right now, and it seems to be all the democrats or Republicans have. Americans buying crap they can't afford and don't need is what got us here. Borrowing money to buy stuff from your employer is no way to make money or keep them in business. We need to quit buying and lower our prices through devaluation so foreign nations will once again become our consumers. We need to be lighter on our feet, and get away from massive unionized companies that are too big to succeed. We need to stop bailing out failures and boot the Toyota Republicans.

JoeBama "Truth 101" Kelly said...

"Obama Administration needs to stimulate car sales this year. Unfortunately, there is nothing in the works that"

So you're for some government help IR. I knew you had some Democrat in you Brother.

To IR and SP: Yes things are bad. And as a middle class guy I am willing to forego my $8 a week tax cut to help my government pay it's bills. I'm a fan of Presdient Obama's. I supported him when he ran for senator in Illinois. But the sacrifice has to come from everyone. The wealthy can afford to pay more and the graduated income tax is the best way I can think of to be as fair as possible to everyone. Screw the little tax cut. It's not any different than the checks Bush sent us a couple times. A bribe. The price for ignoring the national debt is higher than $8 a week.