Global Collapse In Auto Sales Coming Up

In response to my post Plunging New Orders Suggest Global Recession Has Arrived I received a couple of interesting emails from readers, one from the US, the other from an employee of the world's largest automotive parts manufacturer.

Small US Distributor Responds

Dear Mish,

I am a small distributor and sell mostly to online stores. In the past 3 weeks, our business has dropped off a cliff.

Our retail store that usually has 5 orders a day, has had 1 in the past week. I also have a customer with an Amazon store and he has gone from 10 orders a day to a total of 1 order all this week.

Moreover, I have spoken with a number of other distributors and they are all begging for business. There is a dead silence in the buyers right now.

Something is definitely happening and it isn’t good. The numbers are not showing the real depth of this. I think we may see them fall off hard in the next 90 days.

Tom

Employee of German Manufacturer Robert Bosch Responds

Hi Mish,

Love your blog. I've written before.

I work for Robert Bosch in Germany. We make diesel injectors for common rail systems (truck and passenger car).

Our sales forecasts are again down and there is a huge crunch now to save money to try to squeeze out a profit at the end of the year. Sales are down 10% to business plan so they are looking for every dime right now.

The retiring CEO (Ferhnback...a good man) wishes for a "black 0" at the end of the year. However, I doubt that will happen.

Numerous older people have been given incentives to leave the company before official retirement age.

There are numerous closure days still planned. I would guess we can expect more.

So what you are seeing in the PMI is reality. I do not see or hear similar hints in the rest of the German economy yet......

Regards,

Name Withheld by Mish

Notes About Bosch

Wikipedia has these details about Robert Bosch.

Robert Bosch GmbH (commonly known as Bosch) is a German multinational engineering and electronics company headquartered in Gerlingen, near Stuttgart. It is the world's largest supplier of automotive components.

Bosch's core products are automotive components (including brakes, controls, electrical drives, electronics, fuel systems, generators, starter motors and steering systems), industrial products (including drives and controls, packaging technology and solar panels) and consumer

GaryL1 Wrote: Jul 12, 2012 12:05 AM

Many years ago, I had an appliance business. Summer time, and I was extremely busy- lots of sales, and in the winter, particularly around Christmas, it slowed way down. One December I had one sale. It was a used electric dryer that some romantic guy bought for his girl-friend on December 24th as a Christmas present. That year was not particularly good, and it is interesting to see parallels with big business.

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Blair31 Wrote: Jul 10, 2012 9:32 PM

Obama's in over his head. He's drowning 15 feet out. I'll throw him a 10 foot rope.

Hawker 1 Wrote: Jul 10, 2012 9:19 PM

I would like to see the Gov. contracts for buying their fleets , who bids on them and who get the contracts . Wanta bed its GM no matter what the bids were and wanta bet it was done behind closed doors at midnight on Friday.

tlynn Wrote: Jul 10, 2012 5:34 PM

We have an archaic excise tax on vehicles here in MA which tends to discourage new vehicle purchase. The tax, instead of being based on weight(heavier vehicles do more damage to roads than lighter vehicles), the tax is based on book value. So, it is front-loaded, decreasing over time, but very big up front. I don't know how many states operate this way, but it discourages new vehicle purchases, and unfairly shifts the real burden away from owners of heavier vehicles, onto owners of lighter vehicles.

paulinho Wrote: Jul 10, 2012 5:20 PM

True, Obama is not directly to blame for the carnage caused by the housing bubble. That was 95% caused by the Democrats, starting with the progressives like Wilson, LBJ, Carter, Clinton and numerous Rats in Congress, like Barney Frank and Chris Dodd, the two biggest backers of Fannie Mae and Freddy Mack, the two most corrupt loan agencies ever. The big banks took the opportunity to bundle bad housing loans and they went under too. Democrats own the housing bubble, but will not admit it. Obama was in full support of the Rats and outfits like Acorn, all of whom were undermining the economy by forcing banks to make housing loans to people with no credit, nor any way to pay for loans.

Moonbat Exterminator Wrote: Jul 10, 2012 1:30 PM

Hmm. Ford just announced robust sales growth for June. Auto sales are cyclical and still recovering from the 08 - 11 slump. The overall rate is up to 14.5 million total units for the year, which is above the replacement rate.They may not maintain that level of strength, but I don't see a collapse at least not in domestic sales.

Pamela166 Wrote: Jul 10, 2012 3:37 PM

The numbers out of Detroit are ALL phony, Gm "looked" good thanks to a giant Government order and they count "sales" when they ship to the dealers. The dealrs I see seem to have lots full of cars and are bulging at the seams; Bet they aren't selling.

Kurt114 Wrote: Jul 10, 2012 12:00 PM

I'm thinking this fall or winter may be the time to make the new truck purchase I have been planning on. If inventory backs up incentives will rise. Need a new truck so I have reliable transportation for long trips in order to avoid the hazing line at airports. Don't have anything to hide from TSA, just don't want them fondling me again.

Buy a Toyota Tundra !!

kenneth416 Wrote: Jul 10, 2012 10:19 AM

Not to worry, Mr. Shedlock. If auto sales in the USA plummet again, Obama will simply institute another hair-brained scheme like Cash for Clunkers. Current thinking is that anyone who buys an ordinary car would get a Chevy Volt FREE. Additionally, the purchase would be financed by an interest-free loan from the government, which, because it has no money, would borrow it from the Federal Reserve, where Dr. Bernanke is still muttering about QE3 QE4, or some such QE

Ron4594 Wrote: Jul 10, 2012 9:59 AM

The US government turned a national recession into The World-Wide Great Depression, by passing the Smoot-Hawley Tariff in 1930.

Barry Hussein Obamba turned a flourishing economy into The Great Depression of 2012 all by himself.

Joesolis Wrote: Jul 10, 2012 11:40 AM

In fairness, Obama as President, didn't cause the current recession. However, he IS at fault as a hard-core supporter of the policies that got us here.

para_dimz Wrote: Jul 10, 2012 9:24 AM

Mike, if you have been right about deflation, this makes sense. Furthermore, When prices drop, business will rebound. No fun, I understand. The business who can adjust quickly will have a tremendous pricing advantage, even to the bankrupting of competition.

Joseph1790 Wrote: Jul 10, 2012 7:11 AM

Why don't they try a cash for clunkers?? ( Sarcasm )

Frank130 Wrote: Jul 10, 2012 6:49 AM

The dragging out of the recession with high unemployment & low demands for goods is due to failing big government Keynesian economics with sky-rocketing debt levels as well as excessive governmental rules, regulations & taxes that make it difficult for business owners to determine costs. Deep down, consumers also are waking up to the idea that huge debts, huge budget deficits & printing up money out of thin air isn't good. Economic reality is about to set in again & show us we are on the wrong path.

FairnessMan Wrote: Jul 10, 2012 4:17 AM

"Global Collapse In Auto Sales Coming Up"

If Neanderthal union auto worker bums starve to death, the collapse is a good, a very good thing.

Bruce2142 Wrote: Jul 10, 2012 7:42 AM

It's real interesting how many union slaves are now rebelling against their plantation masters. To wit, the WI chapter of AFSCME chose not to pay dues after Governor Walker's reforms said that they didn't have to. Further, when the U.S. auto industry, well GM and Chrysler, was going into the tank, the UAW at Ford saw the writing on the wall and played ball. I knew line workers at the Ranger plant in St. Paul that closed last year, that despite the pending closure, they stated the relations between labor and management had never been better. They also got profit sharing checks, which union leadership frowns on. I have also heard that UAW members in MI, the cradle of the industry, are supporting efforts to make it a Right to Work state.

Bruce2142 Wrote: Jul 10, 2012 7:45 AM

Sorry, I left out the number of WI AFSCME members that stopped paying dues; over 34,000.

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para_dimz Wrote: Jul 10, 2012 9:33 AM

http://www.latimes.com/business/money/la-fi-mo-june-auto-sales-20120702,0,3344685.story
Auto sales UP! Seem the U.S. isn't patterning with the rest of the world; not yet.
GM is posting billion dollar quarterly profits. That didn't happen without the UAW getting with the program.

Pamela166 Wrote: Jul 10, 2012 3:43 PM

CAn you say phony numbers? They count units shipped to the dealer as a "SALE" although NO CONSUMER has driven one off the lot. GM also has NOT repaid the taxpayers and does NOT pay income taxes. Sad to say, you are falling for smoke and mirrors and out right BULL pucky from the government and Government Motors.
Just a Liberal SUCKER.

Jazz Shaw	Yay! Tax dollars for “prison poetry”
Jazz Shaw	About those “doctored” Benghazi e-mails…
Jazz Shaw	White House word of the day – Irrelevant
Ed Morrissey	Could we have any Gosnells in Minnesota?
Jazz Shaw	Video “I don’t know that hiding something from Congress is illegal”
Jazz Shaw	N. Korea launches short range rocket for second day

Mike Shedlock

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