May 09 Auto Sale Up Because Of Discount

and not efficiency. (Is that a surprise to anyone?)

Discounts, not efficiency, drive US auto sales up (6/2/09 AP):

"Americans bought more cars in May than in any other month this year, drawn by fire sale prices that pushed General Motors and Chrysler's sales above expectations despite their forays into bankruptcy protection. Overall sales were still 34 percent lower than a year ago.

"But low gas prices encouraged the sale of bigger gas guzzlers while small cars stacked up on dealer lots. That could be a problem for the Obama administration, if the demand for more fuel-efficient vehicles drops just as it is forcing the U.S. auto industry to produce more of them.

""The great migration away from fuel efficiency is once again under way," said Mike Jackson, chairman and chief executive of AutoNation Inc., the nation's largest automotive retailer. "The price of gasoline determines the type of vehicles consumers buy. Period.""

Period? Does Mr. Jackson, who is a proponent of taxing more on gas so that the gas price remains constant at $4, really thinks consumers only respond to the price of gasoline in their buying decisions?

How about less money to spend? Far less? Combine that with huge discounts, fire-sale prices from those Chrysler dealers? According to this article U.S. auto sales drop, but rays of stability seen (6/2/09 Reuters):

"Terminating dealers have sold or redistributed all but about 3,000 of the 42,000 vehicles they had and are expected to complete the process this week, Chrysler said."

"Rays of stability" that the Reuter's article seems to be seeing is the fact that May sales was higher than April sales.

By the way, Toyota's new Prius is selling very well in Japan, but not because it is more fuel efficient. It's because it is priced 12% cheaper than the previous model, it is bigger, and fuel efficiency increased by 10%. Better spec at cheaper price. (Do you think Government Motors can do that?) Toyota is also engaged in a price war with Honda's Insight.

Here's the summary of May 09 sales for major auto companies:

• GM: -30% year over year (i.e. compared to May 2008)
• Chrysler: -47%
• Ford: -24%
• Toyota: -41%
• Honda: -42%
• Nissan: -33%

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