Despite ongoing exuberance at auto sales in America (which disappointed) - as crashing credit standards enable every Tom, Dick, and Muppet to buy too much 'depreciating asset' for their incomes - there are numerous problems few are talking about for automakers worldwide. Aside from "plans to buy a car" tumbling in the latest confidence surveys, and inventories-to-sales surging, China just poured ice cold water on any hope of stability in that 'growth' market as auto dealers issue the highest inventory alert since June. November data from China shows demand plunging, sales collapsing, and inventories soaring - a triple whammy of "no, things are not 'stabilizing'."
As sales begin to disappoint...
- *GM NOV. TOTAL U.S. VEHICLE SALES UP 1.5%, EST. UP 2.9%
- *FORD NOV. U.S. LIGHT-VEHICLE SALES UP 0.3%, EST. UP 3.2%
- *FIAT CHRYSLER NOV TOTAL U.S. VEHICLE SALES UP 3.0%,EST. UP 3.2%
- *TATA MOTORS: TOTAL NOV. SALES DOWN 7% YEAR OVER YEAR
First, Inventories are at record (absolute) highs and at recession-signalling ratios to current sales...
Second, and that is a problem because the much-hyped and hoped-for future sales to soak all this excess inventory up is not coming soon... As the consumer confidence survey shows the lowest level of "plans to buy an auto" since January 2013...
And finally, Third, do not look to China for any help at all... China November Vehicle Inventory Alert Index rose to 61.8% (from 54.1% in Oct.), the Beijing-based China Automobile Dealers Association says in e-mailed statement.
Automakers appear to have two options, offer buy-one-get-one-free to all new Syrian refugees or cut production dramatically in hopes of easing inventory excess. Good luck.
We are going to need more up and to the right of this...
Charts: Bloomberg
