Monday, October 03, 2005

Ford + GM: The Zombie Companies

The hazy fog over the Bull Ring
The lazy ways the birds sing
A new baby's born every day
Few men may be scorned today
But look at things the other way
'Cause it may well be yer final day
--The Streets

Their strategies have all been built on the inelastic demand of oil, but the motor industry must have known that with rising fuel prices, gas guzzling vehicles were doomed in the long run:
High gas prices hurt Ford's September SUV sales
Sales of Ford Motor Co.'s locally built sport utility vehicles plunged more than 50 percent in September as gasoline prices rose, the company said Monday.

The company sold 12,879 Ford Explorer SUVs, down 57.7 percent from 30,448 in September 2004. It sold 1,771 Mercury Mountaineers, down 54 percent from 3,846 in the same month last year.

Ford said overall sales of its sport utility vehicles were down 51 percent from last year, when it offered 0 percent financing for 72 months.

Whoa. GM is feeling the pain as well..
General Motors Corp. sales were down 24 percent overall, and its SUV and truck sales fell 30 percent. GM said it knew September would be a challenge after a summer of heavily promoted discounting. GM began letting consumers pay the employee price in June and ended the promotion Friday.

That's too bad since both companies have a big portion of their contribution margins tied up in their SUV sales.....and Ford has $1500 of every new vehicle going towards pension payouts. Scary. NA auto manufacturers better hope the Chinese start buying.

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