Auto industry experts say the bursting housing bubble in hot, hot states like California, Florida, Arizona and Nevada has stifled sales by Detroit automakers in some of their biggest markets.
By far, national vehicle sales were down 8.5% for General Motors Corp., Ford Motor Co. and DaimlerChrysler AG. Automakers are struggling in the process of coping with the huge losses they have experienced in recent years.
California and Florida, once listed as the largest auto markets in the United States, are experiencing stagnant sales. Art Spinella, president of CNW Marketing Research in Bandon, Oregon, said the two states are experiencing housing markets so weak that they are largely to blame for that decline, as well as the 2.4 percent overall decline in home sales. country cars. He added: “The housing market and especially home values are behind much of the stumbling in the auto industry.”
Retail vehicle sales at dealerships for the first ten weeks of the year were down 17 percent in California and 11 percent in Florida. Figures can be determined from CNW data. CNW conducts automotive and consumer research for automakers, analysts, and buyers to scrutinize.
In addition to the aforementioned states, Michigan also suffers from real estate problems. In that state, there is a growing inventory of unsold homes, growing concern about home prices, and an increasing number of defaults in the subprime mortgage market, where homes are being sold at higher interest rates. consumers with riskier credit profiles. The real estate business is under intense and efficient pressure in California and other markets, where appreciation and prices were once remarkably strong and encouraged more thrill-seeking companies.
GM and Ford officials blame a sluggish housing market as an explanation for weak vehicle sales. Detroit automakers were already underperforming in California, where Japanese automakers like Toyota and Honda excel. But the housing crash is destroying GM, Ford and Chrysler. In addition, the results severely damage the already critical automotive market. This year in California, sales are down 6.6 percent for GM, 18.6 percent for Ford and 19.4 percent for Chrysler. The reason, according to experts, is the decline in property sales.
Consumers who are anxious about declining home values are also leaning more toward fuel-efficient cars when they decide to buy them. Toyota and Honda, with their Earth-friendly images, are benefiting from that trend. Volvo’s relay might not work, but Saab’s flexible cars might also seem like magic to car consumers.
Mike Jackson, CEO of Ft. Lauderdale-based AutoNation Inc., which owns 280 new-car franchises nationwide, including 80 GM, 48 Ford and 58 Chrysler stores, said he had never seen the market for housing would take such a direct bite out of cars. dirty. “They’re reluctant to make a big purchase if they don’t know how much their house is worth, even if they don’t want to sell it,” Jackson said. “They don’t know how it’s going to turn out.”
Edward E. Leamer, professor of management, economics and statistics and director of the Anderson Forecast at the University of California, Los Angeles, said there are many parallels between the housing and auto markets and their current pain. He added: “Low interest rates set by the Federal Reserve in recent years have encouraged aggressive lending practices in both industries to entice consumers to make purchases sooner than they should. I think it’s going to be a tough year for housing and it’s a A tough story for cars.”
