Domestic Auto Industry a Basketcase according to Market News International
"The domestic automakers need auto sales to strengthen. Inventories were about 20% higher than normal for GM at the end of February while incentives were 37% higher than a year before.
Interestingly, Gary Rosenberger, journalist for Market News International, paints a completely different picture in his March 30 Reality Check column. Rosenberger writes that, “weakness is said to be across the board” and “most dealers are puzzled over how this market could be so weak in light of continued incentives and amid so many indications of an improving economy.” The following are some of the quotes from interviews from dealers to prove his point. “That’s a big drop [23% drop year-over-year in deliveries] and it’s across the board…Inventories are high and deliveries are down. This is not where you want to be at the start of the peak selling season.”
* “Hummer fell off a cliff.”
* “March is about even with last year and with February, but both were pretty lame months”
* “My crystal ball is broken…If you had told me in December that business would be like this in March, I would have said you’re crazy. I planned for a big spring and now I got too much inventory.”
As mentioned last week, the auto industry has to contend with higher raw material prices and GM was paying an additional surcharge to selected suppliers. While General Motors was paying some, although it is now suing those companies for reimbursement of the extra surcharge, GM refused to pay surcharges to other companies."
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