Thursday, March 05, 2009

US Auto Sales Plunged 41% in February

We can bail out their companies, but that doesn't mean people will buy their cars:

U.S. auto sales plunged yet again in February, falling 41% to 688,000 vehicles, according to Autodata Corp. The steep drop left car makers worried the market may not yet have bottomed out.

Almost all auto makers suffered significant setbacks. General Motors Corp.'s sales fell 53% from February 2008 to 126,170 cars and light trucks while Ford Motor Co.'s dropped 48% to 99,050.

Import brands also suffered. Toyota Motor Corp.'s sales slid 40% to 109,583, Honda Motor Co.'s fell 38% to 71,575 and Nissan Motor Co.'s dropped 37% to 54,249.

So exactly why are we bailing these guys out? Call me crazy, but keeping people working in poorly managed companies to make things nobody wants to buy doesn't seem like a very good way to stimulate the economy.

1 comment:

thinking said...

It's a tough situation.

First, as the data shows, all manufacturers, even the vaunted Toyota and Honda, are experiencing steep declines in sales, due to the fact that no one is buying cars in this economy. So I don't know that one can attribute the current downturn in sales to poor product.

Second, I agree that GM has been very poorly managed. I don't know much about Chrysler, but they probably have been as well. I don't understand why the execs at GM weren't fired a long time ago.

Third, I wish there were a way to get Toyota to buy GM and take it off our hands, as well as introduce some good management.

Ford appears that it will survive on its own.

As for bailing out these companies, again, that's a no win situation either way. Granted, keeping people working in a poorly managed companies isn't so great, but letting them get unemployed with no immediate alternative is not so great either. And either way will be costly to the govt, and thus, ultimately taxpayers.

In a reasonably healthy economy, one could let these companies file for Chap. 11 bankruptcy, but in today's time, the theory is that we can't afford the job losses that would occur if these companies and their suppliers went under.

Again, the theory is that if you keep them around on life support, and force them to restructure their industry, that eventually the economy will pick up and these companies can sell enough product again.

Will it work? Who knows. But there will be great pain either way. And the bottom line is whether one wants to take the gamble of letting a company like GM fail.