If you think the U.S. is alone in being in the middle of an automotive sales freefall, you would be sorely mistaken. It’s the global economy, stupid, and as such when we fall so shall the rest like a lineup of the proverbial dominos. Down goes Ford, so goes Renault, so goes Mitsubishi and so on and so on.
As an example, the United Kingdom had a sales slide of approximately 21% last month making it the worst market there in 17 years—this is all the more surprising as this reading was before our financial markets really hit the skids. In addition, September is usually the biggest sales period there as it marks the first month of new model number plates. This practice is sort of the British equivalent of the new model year here in the United States.
One possible reason for this is the fact that the credit crunch–that force that is making it so impossible to get a line of credit that buying even a new washing machine has become an all cash affair–hit the UK a few months before it did us. Unless you are one of those people who squirreled away their savings under their mattress, the purchase of expensive items is pretty much off the table nowadays. (By the way, if you did hide all your cash under your mattress we recommend not smoking in bed. Just a thought.)
Are you like us and sometimes the use of percentages makes your eyes itch? So often an impressive percentage number can hide the fact that the base number isn’t all that big. For those of you who like to see the base numbers, here you go—In September 2007 the U.K. registered 419,290 new vehicles. This year? The figure slipped to 330,295. That’s a lot of Range Rovers and Mini Coopers.
While all automakers there were slapped with sales slides, it was premium makers that were the most heavily hit. Does that sound just a little bit like what’s going on over here? The biggest declines were Lexus (44%), Land Rover (49%), Bentley (47%) and Alfa Romeo (44%). As a couple of those makers (Bentley and Land Rover) have huge manufacturing bases in the U.K. those slides don’t bode well for the future health of the British auto industry. Yes, cynics, there still is a British auto industry. Many of their brands may be owned by offshore interests but their factories are still tried and true local affairs.
Our view? If this global automotive sales slide continues, we fear a brand based bloodbath with individual manufacturers facing near certain extinction. There are only so many quarters of billion dollar losses where cutting half of your workforce will keep the lights on at the home office. Just ask Rover, or Studebaker, or AMC, or MG (we know the Chinese own the name, but that doesn’t count) or any of the myriad automotive brands now relegated to only our memory.
Car sales fall 21% in worst conditions for 17 years
via The Times