I have a question, spurred by a number of articles I’ve read lately. Has the U. S. automobile industry been saved?
I’m open-minded on this subject but, frankly, skeptical. Light vehicle sales have just about recovered to what they were when the recession began. They’re lower than they were at the bottom of the recession of 2001.
GM’s market share is no longer in freefall but it’s a lot lower than it was ten years ago. Its present market share hasn’t even recovered to what it was at the beginning of the recession. The company’s total capitalization is a fraction of what it was twenty years ago.
GM has fewer employees and, importantly, fewer dealers than it had prior to 2009. It’s selling about 2,000 Volts a month which appears to be about as many as the company can produce, something I suggested long, long ago. There’s a substantial wait list for them.
I’d say the U. S. auto manufacturers were surviving but that’s about it. I’m willing to be convinced. Convince me.
My view of the long-term prospects for the industry aren’t nearly as rosy. I think that the U. S. auto industry is in a long and probably permanent decline. Most of their profits are in SUVs and light trucks. Unless things have changed rather dramatically recently we import all of our small internal combustion engines. And Chinese and Indian manufacturers are chafing to get into the U. S. market.
No convincing gonna happen here. BTW – Michael ain’t gonna like your essay. He pins Obama’s economic track record on the auto industry and the stock market.
Obama saved the UAW for a time. He screwed creditors in the process. The former is visible, and Obama can count on the fact that no one cares about bondholders and the knock on effects cannot be measured.
As investors, although build counts have indeed increased from a few years ago, we stay away from auto like the plague. The units won’t be there. I have pointed out repeatedly that the four major time financed consumer purchases have been primed by QE and that is a fleeting effect. Just look at the housing numbers outside of coastal CA recently. Phoenix and Las Vegas are already now being viewed as on the brink again.