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      08-29-2019, 07:10 PM   #1
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Car industry continues worldwide downward trend

BMW still doing good

http://www.xinhuanet.com/english/201..._138345631.htm

BERLIN, Aug. 28 (Xinhua) -- The downward trend in the global auto industry in the second quarter (Q2) of this year continued, according to an analysis of the key financial figures of the world's 16 largest auto groups presented by auditing and consulting firm Ernst & Young (EY) in Frankfurt on Wednesday.
"The global automotive industry is experiencing a sales and profit crisis that is still primarily cyclical," said Constantin Gall, head of Automotive and Transportation at EY.

According to the study, total profits of the world's 16 largest automotive groups had fallen 18 percent in Q2 of 2019.
The number of vehicles sold declined in all major markets and led to five percent global decline in sales, with only Mitsubishi, Honda, Toyota and BMW selling more new cars than a year ago.

French and U.S. car manufacturers recorded the sharpest declines in vehicles sold, of ten percent and nine percent respectively.
Among the largest automobile groups, Toyota was "slightly ahead" of Volkswagen with a sales growth of four percent while the German car giant recorded a minus of two percent.
"All major sales markets are shrinking, resulting in greater price pressure and declining margins. In addition, there are high investments in areas such as autonomous driving and electric mobility," Gall commented.
However, the majority of companies were able to increase their revenues, "thanks in particular to the SUV boom."
Overall, the revenues of the 16 largest automobile manufacturers rose by 1.3 percent, reaching a new record high, the study found.
The strongest growth was achieved by the German manufacturers with an increase in revenues of 5.2 percent, ahead of the French groups with 4.7 percent.
On the other hand, revenues by U.S. companies declined by 3.0 percent while Japanese manufacturers saw their revenues decline by 1.3 percent.

Further cooperation and partnerships would to be expected in order to master the challenges that lie ahead, also through stricter emission limits, Gall said. "This is the only way to control the enormous costs and risks associated with future investments. In any case, we are at the beginning of a selection process."
Despite the weak global figures, EY's consultants saw good prospects for the German automotive industry. The drop in sales would be comparatively small, and the weak profit trend would be due in particular to one-off effects.

"The German companies have recently cleared the balance sheet of old burdens on a large scale," said expert Peter Fuss, senior advisory partner at EY, with reference to topics such as the diesel crisis and the WLTP (Worldwide Harmonized Light-Duty Vehicles Test Procedure) changeover.
According to Fuss, this "major clean-up" could clear the way for rising profits in the coming financial year at the latest, as German car companies would "not run badly in operational terms."
"They are gaining market share worldwide, making progress with the electrification of the model range and will also reduce costs again with tough cost-cutting measures," Fuss said.
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      08-29-2019, 08:40 PM   #2
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Interesting. Slight unit volume decline with a strong consumer in the US market. To me this is the replacement cycle taking a breath, before marching slowly forward and higher in the next year or three.
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      08-30-2019, 09:23 PM   #3
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Funny, we keep hearing this but many of the major car companies are ordering beyond contract.
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      08-31-2019, 03:19 PM   #4
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The dealers are feeling the pain as well.

It's going to be a tough 2020 for everyone in the auto industry IMO.
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      08-31-2019, 05:03 PM   #5
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I like how the entire industry is shoveling huge investments toward EVs not because the customer is demanding it, but because large groups of bureaucrats the world over are demanding it. That's not a recipe for short or long term profitability, especially when gas is cheap and customers are demanding SUVs, at least in the US.
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      08-31-2019, 05:21 PM   #6
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How high can the overall auto debt load go for consumers? $1.2 trillion in the US alone at last count I believe? What a joke, cars are horribly overpriced.
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      08-31-2019, 05:24 PM   #7
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Quote:
Originally Posted by allinon72 View Post
I like how the entire industry is shoveling huge investments toward EVs not because the customer is demanding it, but because large groups of bureaucrats the world over are demanding it. That's not a recipe for short or long term profitability, especially when gas is cheap and customers are demanding SUVs, at least in the US.
As much as I love combustion engine, if we don't change and keep polluting the air ( specially with huge growth in China ) we won't last for to long.
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      08-31-2019, 05:56 PM   #8
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Quote:
Originally Posted by Miko M View Post
As much as I love combustion engine, if we don't change and keep polluting the air ( specially with huge growth in China ) we won't last for to long.
I'm glad you brought up China - they get free reign to pollute while the rest of the world has to adapt. Seems fair.
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      08-31-2019, 05:57 PM   #9
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Originally Posted by NickyC View Post
How high can the overall auto debt load go for consumers? $1.2 trillion in the US alone at last count I believe? What a joke, cars are horribly overpriced.
I ask myself the same question - predictions of a bubble pop in the auto loan market has been called for the last several years and it just keeps chugging along. Some other economic factor may trigger it however.
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      09-01-2019, 07:16 PM   #10
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None of the safety or environmental systems on vehicles were demanded by consumers. All of them were mandated by legislation. I see electrification as being no different than seat belts, airbags, ABS, catalytic converters, EGR, and the list goes on.

Regarding debt, please share links of data showing debt in context with total consumer debt burden. Total dollars (or pounds sterling, or euros, or yen, etc.) of debt is a meaningless statistic. Debt as a ratio of some meaningful denominator is relevant.

The consumer is healthy by nearly any measure.
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      09-02-2019, 12:37 AM   #11
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Perhaps for new cars but the used car market is alive and well.

Personally, I just bought a 2000 Porsche 911 Carerra 4 Cabriolet for just $15k (plus tax/license, of course.) Been looking for a 911 cabriolet to buy for years but never found the "right" one, either because the price was too high and/or the condition was too low. I considered this one a "steal" and bought it on the spot. You can see a pic of it in my "garage."

NADA value in my area is between $18-20k retail. The low price was a red flag but there is nothing obviously wrong w/the car. The IMS was taken care of and the car is otherwise in excellent shape physically and mechanically, as far as I can see, but I'm aware that (like the 335i) it could become a huge $ pit if/when things go wrong and I'm ready to cut it loose in an instant if it does.

In the meantime, I also still have my 2002 MR2 Spyder which has NEVER required a single repair in the 15 years that I've owned it; just oil changes, a couple of batteries and a few miscellaneous parts is all that I've had to spend $ on for it. I have no plans to sell the MR2 as long as I have a place to park/store it, which I do.

The original sticker price of the Porsche was about $80k in 2000, which in inflation adjusted dollars would make it worth about $120k new today. Also bought my 2008 335i for $16k (5 years ago) and my 2012 MB ML350 for $20k (2 years ago) in excellent condition for below prevailing "book" value at the time and both of them are still running strong.

So, IMO, the best automotive deals are in the used car market. Nothing "new" about that but I think it is particularly relevant now.
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      09-02-2019, 07:09 AM   #12
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Quote:
Originally Posted by allinon72 View Post
I'm glad you brought up China - they get free reign to pollute while the rest of the world has to adapt. Seems fair.
on a per person basis, they're just under 50% of US..., fast catching up though...
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      09-02-2019, 07:11 AM   #13
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transition to electric might be painful but a good opportunity, real threat is ride sharing and autonomous driving, that would make car maker become cell phone builder (Foxconn, not Apple)...
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      09-02-2019, 12:22 PM   #14
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Quote:
Originally Posted by NickyC View Post
How high can the overall auto debt load go for consumers? $1.2 trillion in the US alone at last count I believe? What a joke, cars are horribly overpriced.
Overpriced relative to what?
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      09-02-2019, 01:07 PM   #15
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Overpriced relative to what?
Overpriced in relation to wage growth. 72/84 hell even 96 month car loans are not a sign of healthy vehicle prices for the average consumer, nor is the over $1.2 trillion in overall auto loan debt in the United States alone. I shop cars and car pricing frequently, and it's stunning to see how much average prices have increased in just the last ten years. Of course, it's all relative to your overall income but speaking for the average US consumer, new vehicles are terribly overpriced in relation to real wages.

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      09-02-2019, 07:17 PM   #16
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Quote:
Originally Posted by NickyC View Post
Quote:
Originally Posted by See5 View Post
Overpriced relative to what?
Overpriced in relation to wage growth. 72/84 hell even 96 month car loans are not a sign of healthy vehicle prices for the average consumer, nor is the over $1.2 trillion in overall auto loan debt in the United States alone. I shop cars and car pricing frequently, and it's stunning to see how much average prices have increased in just the last ten years. Of course, it's all relative to your overall income but speaking for the average US consumer, new vehicles are terribly overpriced in relation to real wages.

Not a news across assets..., though it might be questionable if car is an asset, cheap financing certainly helped though
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      09-02-2019, 07:21 PM   #17
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Quote:
Originally Posted by Miko M View Post
Quote:
Originally Posted by allinon72 View Post
I like how the entire industry is shoveling huge investments toward EVs not because the customer is demanding it, but because large groups of bureaucrats the world over are demanding it. That's not a recipe for short or long term profitability, especially when gas is cheap and customers are demanding SUVs, at least in the US.
As much as I love combustion engine, if we don't change and keep polluting the air ( specially with huge growth in China ) we won't last for to long.
Mine parents are in Europe and they are looking for EV now. Save the world
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      09-02-2019, 07:33 PM   #18
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Originally Posted by clee1982 View Post
Not a news across assets..., though it might be questionable if car is an asset, cheap financing certainly helped though
For sure, just like cheap money helped blow up the bubbles in housing and student loans. It's terrible how the system has turned the vast majority of people into debt slaves with no hope of getting out.
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      09-04-2019, 02:03 AM   #19
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I bought 5 new cars this year. Don't blame me for this downtrend!
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      09-04-2019, 07:25 AM   #20
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Originally Posted by allinon72 View Post
I'm glad you brought up China - they get free reign to pollute while the rest of the world has to adapt. Seems fair.
What does that have to do with us? We can only change what we control, and we don't control China.

And does that mean you're suggesting that because China is polluting we shouldn't try to be cleaner? Or the rest of the world?
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      09-04-2019, 08:25 PM   #21
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Quote:
Originally Posted by SSW View Post
Perhaps for new cars but the used car market is alive and well.

Personally, I just bought a 2000 Porsche 911 Carerra 4 Cabriolet for just $15k (plus tax/license, of course.) Been looking for a 911 cabriolet to buy for years but never found the "right" one, either because the price was too high and/or the condition was too low. I considered this one a "steal" and bought it on the spot. You can see a pic of it in my "garage."

NADA value in my area is between $18-20k retail. The low price was a red flag but there is nothing obviously wrong w/the car. The IMS was taken care of and the car is otherwise in excellent shape physically and mechanically, as far as I can see, but I'm aware that (like the 335i) it could become a huge $ pit if/when things go wrong and I'm ready to cut it loose in an instant if it does.

In the meantime, I also still have my 2002 MR2 Spyder which has NEVER required a single repair in the 15 years that I've owned it; just oil changes, a couple of batteries and a few miscellaneous parts is all that I've had to spend $ on for it. I have no plans to sell the MR2 as long as I have a place to park/store it, which I do.

The original sticker price of the Porsche was about $80k in 2000, which in inflation adjusted dollars would make it worth about $120k new today. Also bought my 2008 335i for $16k (5 years ago) and my 2012 MB ML350 for $20k (2 years ago) in excellent condition for below prevailing "book" value at the time and both of them are still running strong.

So, IMO, the best automotive deals are in the used car market. Nothing "new" about that but I think it is particularly relevant now.
The best value in existance is a 2-3 year old car with up to 25k miles and warranty...
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      09-05-2019, 04:12 PM   #22
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Originally Posted by nlaak View Post
What does that have to do with us? We can only change what we control, and we don't control China.

And does that mean you're suggesting that because China is polluting we shouldn't try to be cleaner? Or the rest of the world?
The world "controls" each other via various climate accords and pacts. China is the world's top polluter by far and never has stringent mandates the way the rest of the western world has. Of course we should try to be cleaner, but strong-arm bureaucracy has shown to be the least effective way to get things done and has untold unintended consequences economically.
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