Maybe the US auto industry isn't sustainable

[Dreamer Tatum]

In 2004, the average cost of a new car was $28,000 (rounded down, from NADA data), and a total of 16.9 million new vehicles
were sold in the US that year, or about one for every 17.3 people.

In 1987, the average cost of a new car was $13,500, and 14.9 million new vehicles were sold; that's about one for every 16.3 people.

In 1987, American manufacturers sold 10.7 million new vehicles; in 2004, they sold 10.1 million.

The GDP price deflator (yes, ignoring hedonics) has the price of the average 1987 car at $20,500, or about 26% less than what one actually cost in 2004.

Meanwhile, median household incomes in the US in constant dollars rose only slightly between 1987 and 2004; about 5-7%.

So, to sum up, the big three lost market share and are selling roughly the same number of new cars as they did 17 years before.
Americans dug deep to buy the cars, since incomes haven't kept pace with car prices, yet sales haven't fallen all that much.
Still, revenues are apparently not sufficient to sustain the industry.

If the new car consumption per capita is reasonably stable, and if new car inflation has so far outstripped overall inflation, then you have to look at costs. Either the price of an American car is far too low, or the cost to produce one is far too high.

Either you price millions of Americans out of a new car, or you gut the cost structure and end up with something of the same outcome.

[RUMMYisFROSTED]

1. Maybe corporations aren't sustainable.

:think:

[Idealism]

2. Maybe miniumum wage of $7 is unsustainable

Maybe we should pay people living wages that actually keep pace with inflation, seeing as how we haven't done that since the 1970s--despite record corporate profits in the past two decades.

[MarjorieG]

3. Making light ril and fuel efficient cars, when people have money to purchase, is sustainable.

Changing overnight, when people don't even know they want light rail, does not favor the clock.

[kirby]

4. Wall Street wants Year over Year growth...

At some point it needs to stop.

The Big 3 said they estimate this year will be back to 10 million units, a 41% reduction. Even if they were financially solvent, with the economy the way it is, that reduction would still be likely.

[Swamp Rat]

5. Maybe unregulated capitalism is not sustainable?

[Dreamer Tatum]

6. You picked the wrong industry to claim lack of regulation nt

[Swamp Rat]

8. We must be reading different newspapers. Without a doubt, the auto industry lacks regulation.

1) Emissions standards to combat global warming

2) Design standards that utilize photoelectric power, and other energy sources

3) Wage standards that promote parity between management and workers

4) Legal standards that prevent laissez-faire lobbying of special interests, especially those of foreign origin

[Dreamer Tatum]

11. Show me one industry that is regulated in those ways

and you will seem credible.

I'm talking about what IS. Looks like people want to discuss what they WANT.

[Swamp Rat]

16. Red herring

Your argument may be more credible if you did not resort to logical fallacies.

[Dreamer Tatum]

17. Hah. You post a wish list and accuse me of a red herring.

Heh. Please.

[Swamp Rat]

20. What was OP about?

heh! :D

http://www.physics.smu.edu/~pseudo/LieStat/

[PVnRT]

22. Pharmaceuticals...chemical weapons destruction...nuclear power

All massively regulated. Frankly, I don't know what you're talking about.

[northernlights]

25. maybe if the US auto industry didn't blow $50B per year

on lobbiests to fight reasonable safety and emissions regulations, not to mention millions more on advertising SUVs and trucks, and instead had invested that money into designing fuel efficient and affordable cars that could compete with Honda and Toyota, they wouldn't have lost margin share and they would be profitable.

It also would help if they reduced executive salaries to something reasonable, and fired the failed executives they have.

It also would help if the US stopped squandering hundreds of billions -- and trillions -- on disastrous, unprovoked attacks on other countries and invested a LITTLE of that money in single-payer health care, thereby freeing the US auto industry from some of their contractual obligations.

[4 t 4]

18. I love you Swamp Rat n/t

[MichiganVote]

7. Maybe your figures and your logic are full of holes too.

[Dreamer Tatum]

10. Can you please show me where?

What have I said that hasn't been repeated here forever? Incomes are stagnant. Car prices are through the roof. Foreign competition is substantial.

I used data from the Census, NADA, and the BEA.

Feel free to critique my logic.

[MichiganVote]

29. The fact that incomes are stagnant is the fault of the auto industry how?

Is there even a link between stagnant wages and the auto industry? Maybe, but surely there are other variables at play.

As for car prices being through the roof, the fact is that all cars sold in the US are high, including imports. Some, as in Hunydai offer some perks such as the 100,000 mile drive train guarantee but their cars are not cheap.

Foreign competition is substantial? What competition? The foreign car makers have had it made for the last 8 years under King George. They are permitted millions more cars *IN* the US than the US car makers are permitted to place *IN* the foreign markets.

I can buy a 2008 Sebring in Detroit today for $12,900. Other than a cheap 4cyl car from the "competition", ain't nothing going to top that.

Also, let's consider that the banks and credit unions were giving better credit rates to buyers of foreign cars....that makes a difference too.

So go ahead, bury the industry in MSM logic. Its worthless but whatever floats your boat... er, car.

[Jim__]

9. I don't believe you've identified a real dilemma.

Either you price millions of Americans out of a new car, or you gut the cost structure and end up with something of the same outcome.

What percentageof American cars sold in 1987 were SUVs? What percentage in 2004? Can we manufacture non-SUV vehicles for less than SUVs? Will Americans buy non-SUV vehicles? Could the manufacture of cheaper, more efficient cars make the American auto industry more profitable?

[Dreamer Tatum]

13. Actually, you've uncovered a huge dilemma.

People inside the industry and out have confirmed that the source of profitability over the last long while was...trucks and SUVs.

You'd have to divest of the resources to make those vehicles, and retrofit for smaller cars using different engines. Then you have to sell those cars, and with gas at $1.50 again, I'm sure that'll be as hard as it was a few years ago.

It seems like a very hard do, either way you slice it, which leads me to where I started: there is a huge amount of unsustainability here.

[catnhatnh]

12. Lying with statistics...

Mean, median and mode are ALL valid "averages" for the purpose of statistics.

While you speak of median for US income I see only "average" costs elsewhere. Since there is no mention of US manufactured cars or balancing the 1000 sane people who buy a Focus to each penis-compensating clown buying a Hummer when "averaging" cost I googled Worlds Most Expensive and Worlds Least Expensive cars...

My results topped off with the Aston Martin One-77 at $2.3 million per copy and bottomed out at the Tata Nano at 100,000 Rupees-or about $2,500. This means if you use the SAME type of "average" in your "average" figures then the average cost of a new car is $1,150,500.

But of course,this would merely undermine your post. So did you intend to make a point, or to tell the truth?

[Dreamer Tatum]

14. There's lying, and being obtuse. Guess which you are.

I used prices averaged over every new vehicle sold in the US. Feel free to peruse:
But fine, have it your way: prices haven't increased. Real incomes haven't hit a wall. There is no such thing as foreign competition.
Whatever...have fun.

[catnhatnh]

19. You based your op on statistics...

either defend them from my post or don't. If we assume the lowest priced vehicle in the US was around 10K then to sustain your assertion of "28K" then you will need to prove that the most expensive car sold here that year was 46K...Good Luck

http://www.motortrend.com/roadtests/coupes/112_0708_2008_chevrolet_corvette/index.html

[Swamp Rat]

21. See post # 20

:D

[Dreamer Tatum]

26. What a joke.

I'll take an average over millions of cars over the midpoint of two cars any day of the week. I mean, where do I begin? Your silly example McNugget was for the asking price of the car, not what it actually sold for.

But you know what? This is silly. If the median price of a car is higher than $28K, then you've made my point for me. If it's less than $28K, then we still have the same problem as now, just with a different number.

Whatever.

[catnhatnh]

28. My point was that you cherry picked your statistics...

Do you understand the three types of averaging? Did you use the same type in each number you quoted?

[leftofthedial]

15. Americans can't afford to buy cars.

until we have meaningful correction of the wealth concentration, and meaningful demand-side stimulus, it will get worse.

Unfortunately, I have zero confidence that the Obama economic team understands this.

[4 t 4]

24. I think we all know it's not going to work,

cause who can buy cars if they have no money, but so what, the way they are throwing money around does anything make sense? Just do it for now to save jobs for maybe another 6 months. The last thing this country needs is 1 more American out of work now. Who knows what might be in a few months. We need to buy time for everyone that still has a job, no?

[ColbertWatcher]

23. What is unsustainable is the current corporate model, including CEO salaries. n/t

[Mike 03]

27. You are right. It's not, but we have to make it so.

We need to disguise bankruptcy chapter 11 as something else, something more attractive, and sustain the Big Three for a couple years.