The Cash for Clunkers program is fading fast in the rear view mirror and it’s quickly becoming apparent it was all for not. Just as many suspected, the government created a small, unsustainable, bubble in the automotive sales numbers in hopes of providing what some might call a “silent bailout”.

Take a look at this quote:

Manager Adam Silverleib said business was “pretty intense’’ as a result of the federal stimulus program, with the dealership hustling to accommodate customers and handle the piles of paperwork required for them to receive reimbursement on vouchers. “Now we’re kind of back to where we were in the spring,’’ he said.

Interesting to see that the sales are back to where they were now that there isn’t an artificial demand in place. Just to stimulate your memory, here is what the industry was looking at (in terms of sales) this past spring:

“I’ve seen everything except that a Martian is going to run General Motors,” the automaker’s sales chief, Mark LaNeve, said on a conference call. “We’ve been fighting every one of these rumors, and I can tell you they don’t help sales.”

GM beat the average estimate for a 37 percent sales decline, based on a survey of 5 analysts. Purchases by fleet customers buoyed results, while sales to individual consumers fell 45 percent, Detroit-based GM said. Honda was projected to drop 27 percent, based on 4 estimates.

Ford’s slide exceeded the 30 percent average estimate among 5 analysts surveyed by Bloomberg, and Chrysler outstripped projections for a 37 percent drop. Toyota’s decline was greater than the 37 percent average of 4 estimates, while Tokyo-based Nissan’s slump exceeded a projected decrease of 28 percent. April had 26 selling days, the same as a year earlier.

If this dealer is representative of the rest of the nations, automakers are back to sales of 30% to 50% off on a year over year perspective. So, the bailouts and government assistance given to the automakers (the 1st direct loans, second direct loans, and the bailout) was simply to give a lifeline to the industry as they limp along looking for the end of the recession.

There was another interesting comment that should have a huge impact on industry watchers:

Nationwide, customers snatched up 700,000 new cars, most of them foreign-made, and the government ended up paying out nearly $3 billion toward the purchases.

Sorry GM, sorry Chrysler… sounds like you didn’t get your part of pie, though I would be interested to know what constitutes “most.” What percentage was domestic, and what was the brand breakdown of that percentage.

I believe the Cash for Clunkers program is a micro example of our current economic situation. Once the housing tax credit vanishes, so will the buyers. Once the government spending stops, so will the “growth” many say they are witnessing.

The consumer represents roughly 2/3rd of economic spending in the United States and it’s quite clear that the consumer isn’t spending, and if that continues, it would make sense that the economic conditions within the next six months would begin to once again move downward.

As for the car companies, the end of the recession is not yet within sight. If sales do reflect the beginning of 2009, it is a matter of time before they ask for more assistance.

Google Latitude

A number of weeks ago Google announced their “Google Latitude”, an application one can load on their smart phone in order to let others know your location, and I was all excited to share with the world just how little I travel in any given day.  Sure, people have issues with the privacy issues (are you being tracked, what have you) but I think it’s quite cool.  

Today I received an invitation from a close friend, so I decided to get off my bum and install the application on my phone.  Yea, too bad the iPhone version isn’t ready.  The application is in development, but still… I feel a bit left out.  

It’s that time for Car sales numbers…

No one had expected the car sales numbers to be positive but the pain automakers are facing continues to grow.  Look at how badly the sales results are off:

• GM: 53%
• Ford: 48%
• Chrysler: 44%
• Toyota: 40%
• Honda: 38%
• Nissan: 37%

Obviously the import automakers are also hurting, but I still don’t understand how GM and Chrysler can make the case that the government should help them survive.  Capital needs grew beyond the original forecast which lead to GM to ask for an additional $16.6 Billion from Uncle Sam, it makes me wonder how much more cash we can throw at this problem before the people of this nation say enough is enough.

Update: 3/3/09 11:23PM update

Most agree that the economy is in the tank, and we all know auto sales are total crap, so let me ask you this question.  With the launch of the 2009/2010 models, why would the car companies raise their prices?  Saying “inflation” in the largest period of deflation in recent memory won’t work.

Also, why doesn’t GM just kill off Opel, Saab, Hummer and Saturn? Saturn has never turned a profit for the company.  NEVER. Why keep the company alive if it cannot survive as stand alone business?  

I’m looking forward to Thursday when the GM Bondholders meet with the Govn’t auto taskforce…

Now this has the potential to be very, very cool. 

Toyota is allegedly developing a car that will be powered by 100% solar energy.  However, the release of such an automobile is years away from actually coming to market. The development plan has two phases – the first is to produce a car that is able to obtain energy from solar cells within the vehicle as well as being charged via solar cells from homes.  The second version would be powered strictly by solar cells on the vehicle.

While this has the potential to be very cool, there are a number of things that we should take into consideration.

1. Initially such a car would, most likely, be a smaller vehicle due to the energy consumption needs.  I would venture a guess that this could be the size of a Prius or Smartcar.  As the technology progresses and batteries get smaller, a large car may be developed.
2. Solar energy is, obviously, a clean and renewable energy source.  Unfortunately, the technology used to create solar cells is NOT green in any manner.  Nitrogen trifluoride, which is used to treat solar panels, is a gas considered to be just as bad as Carbon Dioxide – if not worse.
3. Adoption of solar for the home has not taken on in the United States on a large scale, which would make the first generation of this car would, most likely, be unavailable within the United States.
4. As this would be “new” technology, the cost for early adapters would be rather high.

If this is the direction of Toyota and the Auto Industry, this has the potential to change the way the world views vehicles. I fear, however, there are a number of obstacles in the path of such a development at this point.

When the CEOs of GM, Chrysler and Ford when to Congress looking for huge loans, it turns out they took the corporate jets.  The press jumped all over the CEOs for their actions.  From a public relations perspective, I can see how it would look bad.  You go asking for money yet you take a private jet… yea, does not look good.  

I’m not going to fault the management for flying the corporate jet(s), I don’t have much of a problem with that, but I do take issue with the response to the negative press – the CEOs decided to drive to DC AND they publicize it.  

This is just a blatant play to the American people.  It’s the CEOs trying to say “we care”.  It’s the corporations trying to look good.  It’s a PR stunt trying to gain support for their loan packages.  

Americans may be unintelligent but they are not stupid.  The public can see through such a stunt.  Wake up automotive CEOs!