Auto Sales Could Be Economic ‘Time Bomb’: USA Today
Nothing symbolizes America better than a big car or truck swaggering down the road. That strut has infected the whole industry during almost four years of record and near-record sales, but it is about to become a
stumble, according to USA Today.
Automakers expect to report only lukewarm October sales on Nov. 1, despite fire-sale discounts and free loans. That'll be the
second consecutive month of sales well off the blistering pace that has become considered normal. It could be a signal that automakers have spent years worth of marketing cash the past 12 months to do no more than pull tomorrow's buyers into showrooms today. If so, deals could get even better, according to USA Today, because car companies aren't planning production cuts.
Signs of trouble, according to USA Today:
Buyers are getting incentive fatigue.
Small players are having big troubles. Daewoo Motor Company filed for bankruptcy protection. American Isuzu Motors plans to downsize.
Money problems are closing in. Rating agencies have downgraded the creditworthiness of Ford and GM to near-junk-bond status, making it more expensive for them to raise money.
A slump can feed on itself. Dealers will cut back already lean inventories of new cars and trucks if sales continue to sag, says Roger
Penske, CEO of UnitedAuto Group.
Detroit automakers are losing share to import brands.
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