According to Ken Czubay, head of US sales, service and marketing at Ford Motor Company, no expected downturn in sales should result after the recent blizzard that hit the northeastern United States.
It is wrong to compare the effects of the February blizzard, which some news outlets have dubbed “Nemo,” to the damage which Hurricane Sandy inflicted on auto sales back in November. In the case of Sandy there was actual damage to infrastructure which affected Ford’s ability to produce cars. Also, Sandy incapacitated approximately 200,000 brand new vehicles, says Chief Economist Paul Taylor of the National Automobile Dealers Association. Nemo is not expected to cause any significant damage to infrastructure.
Car manufacturers say that whatever losses they suffered in October and early November from Hurricane Sandy was made up in the following few months.
It has been nine long years since Chevrolet came out with a new model of their iconic Corvette Stingray, and this week the latest model will be unveiled at the annual auto show held in Detroit.
This is the seventh incarnation of one of the world’s most popular luxury sports cars, and is therefore labeled as the C7. General Motors already previewed the car to the media this past Sunday, and plan on making photos and videos of their new design available to the public soon.
Some people, however, are more invested in this latest Stingray model: one hundred members of the southeastern Michigan branch of the Corvette Club are anxiously awaiting the arrival of January 19, when GM will allow them to touch and view the great car one hour before the official opening of the auto show.
Social director of the club Peter Shilland, owner of an exclusive 2009 Corvette Callaway, said:
“We want to hear from the engineers and see how far they’ve come with the C7.”
According to GM the car has a totally new design, and will be on sale beginning this coming summer.
Creating a mood of optimism among auto industry executives, sales for vehicles rose to a five-year high-point for the month of November. Sales improved due to the aftermath of Hurricane Sandy which stimulated the purchase of new cars after many cars were destroyed in the storm, as well as consumers replacing ageing cars in a mood of optimism about the economy.
November’s sales rose by an exuberant 15 percent, selling 1.14 million vehicles, the highest sales figure for November since 2007, the last November before the recession wreaked havoc on the auto industry. The poor economy and crisis of 2008 led to a bottoming-out of demand for new cars and the eventual bankruptcy of Chrysler and General Motors.
“Vehicle sales are one of the encouraging spots of our economy,” said Gary Bradshaw, portfolio manager with Hodges Capital Management in Dallas.
Car sales help analysts predict the state of the economy as it’s an early indicator every month of US consumer confidence. Combined with the improved housing market auto industry executives are hopeful about the year to come, 2013.
“Looking at the national picture, the apparent recovery in housing that we talked about last month and the encouraging new data on consumer sentiment and confidence are all positive factors,” Kurt McNeil, GM’s vice president of U.S. sales operations, said.
A just-released study conducted by academics concluded that the $12.5 billion government bailout of Chrysler in 2009 actually harmed the company more than if the government would have left them on their own.
Economist Brian Kelleher Richter and colleagues Adam Fremeth and Guy L.F. Holburn showed that Chrysler’s sales were 20 percent lower after the bailout than they would have been if the company had to fend for itself. That is true, according to the study, even if Chrysler would have had to declare bankruptcy, (which it did do, anyway), and even if its factories had been purchased by other car manufacturers. The study does not give an estimate for the worst case scenario that politicians and employees and Chrysler were worried about: that is the liquidation of Chrysler, selling the company for parts and the complete closure of its factories.
The damage done by the bailout to Chrysler as a company involved the bad reputation it gained, a higher turnover at the executive level and disputes between Chrysler’s managers and their government supervisors.
Richter stated that his study cannot answer the question which is at the heart of this Tuesday’s presidential debate: Is it worth risking billions of dollars in taxpayer’s money to save many thousands of jobs. The Chrysler investment ended up as a $1.3 billion loss for the Treasury department, and from the standpoint of management, Richter said, “this was a bad way to go about it.”
“In terms of the larger public-policy question, it’s hard to say” whether the bailout made sense, Richter said. “But the company itself should have said `No, we shouldn’t do this.’ The CEO should have said, as a fiduciary for the shareholders, I should just sell it off piecemeal.”
The Nasdaq rose to its highest point in eleven years as optimism is mounting that the US economy is well on its way to recovery. The good news that fueled the Nasdaq rally was last month’s surge in the number of people hired, paving the way for what many analysts believe is a clear road to economic stability and growth.
The Nasdaq rose by 1.60 percent, reaching 2,905.34 on an increase of 45.66 points. Standard & Poor’s 500 Index grew to 1,344.66 as it surged by 19.12 points, or 1.44 percent. The Dow Jones industrial average climbed by 153.49 points to 12,858.90, which represents an increase of 1.21 percent.
Improved Economy Brings Higher Car Prices
The National Automobile Dealers Association is predicting that consumers are ready to pay more for new and used cars this coming year as the economy shows definite signs of improvement.
Used Cars in Demand with Low Supply
The NADA forecasts a rise of 6 percent for the average car to $30,000. An even higher price increase of 8 percent is expected for used cars, especially for SUVs and pickup trucks. For small second hand cars the price rise will be significantly lower, climbing by only 1 percent to an average price of $9,475.
More People Ready to Splurge
Luxury cars will most likely be in greater demand than in previous years as the economy keeps pushing forward, allowing people the confidence to splurge on more expensive cars. Used cars are in tight supply now because so few people purchased new cars during the years of the recession.
Paul Taylor, NADA chief economist, believes that US car sales will go up by 9 percent to 13.9 million in the year ahead. Low interest rates and enticing new products will most likely boost sales, according to Taylor.
