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WP Says Now We Have A ‘Car Glut’ Crisis

From those economic planners at the Washington Post:

Too Many Cars, and They’re Not on the Road

After ‘Car Bubble’ Collapses, Excess Inventory Creates a Backlog

By Brady Dennis
Friday, April 3, 2009; A01

The sea of new cars, 57,000 of them, stretches for acres along the Port of Baltimore. They are imports just in from foreign shores and exports waiting to ship out — Chryslers and Subarus, Fords and Hyundais, Mercedeses and Kias. But the customers who once bought them by the millions have largely vanished, and so the cars continue to pile up, so many that some are now stored at nearby Baltimore-Washington International Marshall Airport.

The backlog exists because many of the factors that contributed to the collapse of the housing bubble — cheap credit, easy financing, excessive production, consumers buying more than they could afford — undermined another large and vital American industry.

"There was a car bubble," Steven Rattner, who President Obama recruited to head a Treasury Department group charged with finding solutions to the mountain of problems facing the American auto industry, said in an interview last month. "We had this artificially high sales rate."

During the boom years of the early and mid-2000s, automakers were selling more than 16 million cars a year in the United States. They are on pace to sell fewer than 10 million this year. General Motors posted a 44.5 percent drop in March compared with the same month a year ago. Ford’s sales tumbled 41.3 percent. Chrysler’s fell 39.3 percent. Toyota’s sales fell 39 percent, and Honda’s dropped 36.3 percent.

One of the key questions the auto task force must answer is figuring out a sustainable number of annual auto sales. Only then can it determine the best way forward for U.S. automakers. "You had a huge number of cars being sold," Rattner said, "so I don’t think it is prudent to assume the sale levels are going to back to those levels."

What drove sales so high in the first place? …

"Loose credit, incentives, leasing — it really kind of fed the beast," said Jeff Schuster, executive director of forecasting for J.D. Power and Associates. "That made many cars that might have been out of reach affordable."

In turn, Americans bought more cars and bought them more frequently. They spent more money than they could afford, thanks to loans that stretched six years or longer, even for buyers with shaky credit. Rental car companies and municipalities turned over their vehicle fleets more often. And the automakers kept churning out cars to meet the very demand they had helped create

When the bottom finally fell out, many people found themselves with loans worth more than the cars, just as millions of Americans owe more on their mortgages than their homes are worth

Another day, another crisis that only the federal government can solve.

The backlog exists because many of the factors that contributed to the collapse of the housing bubble — cheap credit, easy financing, excessive production, consumers buying more than they could afford — undermined another large and vital American industry.

That’s funny, because the Washington Post and the rest of our one party media seldom if ever mention this as a cause of the housing crisis.

One of the key questions the auto task force must answer is figuring out a sustainable number of annual auto sales. Only then can it determine the best way forward for U.S. automakers.

Ah yes, this kind of economic planning has worked so well everywhere it has been tried.

The Soviet Union, Cuba…

This article was posted by Steve on Friday, April 3rd, 2009. Comments are currently closed.

6 Responses to “WP Says Now We Have A ‘Car Glut’ Crisis”

  1. LondonConservative says:

    “When the bottom finally fell out, many people found themselves with loans worth more than the cars, just as millions of Americans owe more on their mortgages than their homes are worth…”

    Should someone explain to this genius that cars, unlike houses, almost never appreciate? In the first year a car can lose up to 40% of its value so unless you pay a huge amount down on the car, or do a one year loan chances are you’ll be under water. But I guess that makes for a boring story…

  2. proreason says:

    The car glut is due solely to the destruction of the world economy, put in place by Drooling Barney Franks and his fellow criminals, and picked like a pin in a balloon in Sept and October of 2008 by George Soros and his fellow cesspool aristocrats so they could sieze the government and entrench themselves in power forever.

    Until that moment, there was no car glut. Period.

    Yet now, thanks to the hollowed cheek “journalists” on the Soros payroll, the reasons have been spun into consumer greed and stupidity.

    Orwell missed it by 25 years.

  3. U NO HOO says:

    After four Fords and four GMs we are back in a Ford.

    Home sweet FoMoCo home.

    PS, made in Mexico.

  4. pdsand says:

    So the housing bubble and the car bubble had the same cause and effect. Why are the auto makers the devil, and the mortgage borrowers saints who just fell on hard times, and deserve loan modification?

  5. canary says:

    Some how Obama will make sure minorities and illegal’s will get a brand new car for free.

  6. Liberals Demise says:

    Well….now it has come full circle. The US media has found itself at a lack for news now that their spittle cup isn’t flowing over. Could it be that the Obwana and the Best Dressed Iron Worker have gone crossed the pond and left them with no bylines?
    NEWS FLASH—————CAR GLUT CRISIS——————————-

    I have a news flash for you watchdogs……..

    AMERICANS PISSED AND READY TO REVOLT OVER LACK OF ADULT SUPERVISION OVER NATION!!

    The oath of office means nothing to these people but money and power.
    Word to the wise……BOTH ARE FLEETING!!

    Your headlines should read:

    LOONS SEIZE THE ASYLUM AND NOW RUN AMOK!!
    (film at 11)


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