Let me get this straight,
Demand for trucks has plummeted near 40% in less than six months. The market is saying no to trucks and other high fuel consumption vehicles. General Motors decides to close the plants that manufacture these high gas consumption vehicles. Stephane Dion says Flaherty should be fired because of this.
Makes perfect sense to me.
Of course, that would also imply that Dwight Duncan, Finance Minister of Ontario, who has sent millions of taxpayer dollars to GM, Ford, and Chrysler in 'investment' (read Corporate Welfare) should also be fired because of this.
Which is why Dalton McGuinty will steer clear of such frivolous comments by Dion.
12 comments:
Demand for trucks in Canada hasn't plummeted at all let alone 40%.
Trucks comprise an all-encompassing category that includes minivans, sport-utility vehicles, light and heavy trucks, vans and buses. Total sales of these vehicles surged 3.5% to a record high 831,535 units in 2007. This was the third consecutive year of growth in annual sales of trucks.
Trucks represent a growing share of the new vehicle market in Canada. In 1992, they accounted for only 35.0% of the entire market; by 2007, this share had risen to nearly one‑half (49.2%).
In response to Robert, who is flat out wrong. The rapid rise in the price of gas started in Feb 2008. Obviously this would not have impacted truck sales in 2007.
Current truck inventories are ballooning and sales are down dramatically.
Mccllelland - are just trying to be obtuse?
Either way, I don't think that linking to some historical data for 2007 rebuts the proposition in the original post.
In fact, according to:
. . . GM, the nation's No. 1 auto seller, said auto sales fell a greater-than-expected 30% in May to 272,363 vehicles. Truck and SUV sales dropped 39%, . . .
Those are the total North American numbers. As for Canada:
. . .GM said Tuesday truck sales for the month totalled 16,011, down from 23,852, a drop of 32.9 per cent, while car sales . . .
I suppose if you go back far enough, let's say May 1908, you could say that truck sales are quite robust.
But that, just like your comment, would be entirely irrelevant.
The rapid rise in the price of gas started in Feb 2008.
It began before that. The price of gasoline was 70 cents in 2002. And even if we just look at the recent rise since Feb/08, it still hasn't impacted sales of trucks in Canada.
Those are the total North American numbers.
While it's true that US truck sales are down, so are US auto sales. If this was a result of a behavioral change we'd expect to see truck sales down and auto sales up. Since that's not the case there must be a different reason for it.
The turmoil in the subprime home mortgage market is rattling the U.S. auto industry, making new car purchases more difficult for many consumers.
Still, '08 and the latter half of '07 were bad for GM (even if the broader market is holding up, which i'd guess that it's not).
Check the sales reports of GM canada, from november 2007:
http://email.gm.ca/corpdb/cachq/pressrel.nsf/ab614d58c777106e8525681900515da4/fe540b2c1e42fa51852573a60068fe30?OpenDocument
ytd sales were flat(up 1.1% from 2006), and given november's drop (-11.6% year over year) i'm going to guess it was going down hill towards the end of '07, since the recent may 2008 sales report shows:
http://email.gm.ca/corpdb/cachq/pressrel.nsf/7a15ac9c7647fb7985256790005e5a02/1e82bf82791327ce8525745d00687f58?OpenDocument
that ytd they're already down 17.1%, and may specifically was down 32.9%year over year.
Robert,
What the hell is your obsession with stats on truck sales in Canada?
It's GM truck sales in general, not just the ones in Canada, that are down, and that's what Kirk originally referred to. Who really cares what the sales are in Canada? The Canadian market is just a rounding error compared to the US market. Sales up here could be going through the roof, but if they're tanking in the US (where most of the trucks coming out of Oshawa go), the demand for volume in that plant will dry up.
And whether the drop in sales is caused by high gas prices, subprime mortgage crashes, or the cost of tea in China, it doesn't really matter. Sales are down, the volume required at the plant goes away, and it has absolutely nothing to do with Flaherty (which I think was the whole point of his post before the comments drifted off topic).
Dave is right,
The whole point of the post was to suggest that it's not Flaherty's fault that the market has changed in such a short time.
The real story here is being missed entirely. Where is Toyota, Honda, Mazda, and Hyundai in all of this? Are they crying the blues, shutting plants because of lack of demand for their vehicles? Not that I can see, anyway.
Which makes this whole thing stink even more. By throwing tax dollars to keep jobs here, what we are saying is that we don't want our market to change with the times. We are saying that we want to subsidize a market that otherwise may not exist. It's like saying that if BigMacs aren't selling anymore because people want healthier food, we throw tax money at MacDonald's to ensure we don't lose jobs to other innovative companies who might instead sell salads. At the end of the day, people will still buy salads and the Big Macs will rot in the parking lots because no one wants them.
We do a disservice to the workers in the long run because when it becomes apparent that no amount of government money will change the reality, the workers are left high and dry anyway, with less time to adapt.
But hey.. if it keeps the government popular...
it's not Flaherty's fault that the market has changed in such a short time.
Tough. Fair or not the government of the day wears the economy.
What the hell is your obsession with stats on truck sales in Canada?
I'm not obsessed with stats on truck sales. I'm merely trying to correct the erroneous belief that rising gasoline prices will change the behaviour of automobile consumers. If Kirk hadn't added this line "The market is saying no to trucks and other high fuel consumption vehicles." to his post I probably wouldn't even have read it.
And to head off your next possible question about why I'm concerned with correcting the record, consider this. If people keep casually pushing this fallacy that rising gasoline prices are affecting automobile consumer's behaviour then a carbon tax will be accepted as a perfectly logical method to achieve this end even faster.
Robert,
We could go on and on, but there's no denying that the current economic situation in the US coupled with rapidly rising gasoline prices have affected truck sales. The trouble with your comment about this reality paving the way for consumers to accept a carbon tax is that not all carbon generating activity is due to people wanting to drive around in SUVs.
Many of us must drive. Many of us consume products that have high carbon value. While we may be able to curtail some of this activity, we must live our lives regardless. A carbon tax will merely punish every one of us needlessly and force our economy further into stagnation. Bad economic situations will reduce carbon consumption that's for sure.
Robert:
GM spokesman Stew Low said the closure decision was prompted by a "fundamental shift away from large trucks and SUVs to cars which we believe is not cyclical and can't be reversed.
"There just isn't the market anymore and we see no reason to keep building vehicles that consumers don't want."
Post a Comment