Blog

This week, I sat down for the sales conference calls from Ford and Chrysler. How are things, you ask, or don’t, as the case may be? Well, they’re both down about 35 percent. On the bright side, no one cried on the phone.

“Run for your lives! The economy’s collapsing!”

Ford says their SUVs are losing market share on account of higher small- and mid-size car sales. The trucks are about the same from a year ago. It’s the same message the press heard got at the F-150 SFE unveiling last month: The truck market has been refined to the “needs” buyers because the economy has driven the “fashion” people into cars. Ford execs say trucks are actually a stronger segment than cars right now because of incentive spending, residual values of trade-ins that have risen since May, and business vehicle purchases that were being postponed at the end of Q2.
They talked a lot about rolling out the new small cars and their “10 new vehicles in nine months” thing. Flex is doing very well compared to the rest of the crossovers, but they weren’t able to anticipate the trade-in problems Flex buyers — most of whom already have SUVs — are having trying to get into something new.
The F-150 marketing launch has been moved up to November because they were able to sell down existing inventory faster than they had expected. That sell-down also was a major point at last month’s event.
The overall tone of the call was downbeat, of course, but more so than I thought it would be. Ford’s George Pippas called the slowdown in showroom traffic over the past ten days tantamount to the aftereffects of a natural disaster or 9/11.

Hey, check it out: Hurricane Economy!
They drubbed the point that short-term credit is in short supply, and even the people who can get financing are too cautious to drop a lot of money on a car right now. They also were careful to point out that no one can know when the downward trend will bottom out.
At Chrysler, while the news is pretty much the same — OMG NO CREDIT ALL WILL PERISH! — it was delivered with more of a tone of “This is what we thought would happen, and everything is going according to plan.” They repeated several times that, even though they and the industry in general are off 30-35 percent, nearly a million new cars were sold industry-wide last month.
Ram, Caliber, Journey and all the minivans were singled out as doing especially well. Not surprisingly, these are some of their most heavily incentivized vehicles. Orders for hybrids are said to be higher than current production allows, and some lines are being flipped away from the normally aspirated engines. This was specifically said not to be a production shift, though.
They’re putting a lot of emphasis on their incentive packages; a new Ram can get up to like $6000 in various incentives over 72 months. Instead of keeping room to change or add incentives as the quarter progresses, they’ve mapped out a 90-day plan to allow their dealers to campaign better at street level. They said flat out that they expect each month in Q4 to be better than these past few months, and several questioners were downright incredulous. No one said, “Where the hell are you getting that from?” but one guy came close.
The tone here was much more upbeat, but I think in declining to speculate in any way about the future of the general marketplace or to acknowledge that things may get worse before they get better, Chrysler came off as delusional, or at least willfully blind.

La la la la laaaa! We’re not listening!