Monday, August 07, 2006

Ford Sales Drop 34%

...this is not a bad thing. As I've mentioned before, these car companies have focused way too much on being number one or number two and not focused enough on being solidly profitable. Toyota has become the number two automaker in the US.

This is the best news I've heard come from Ford management in quite some time:
Ford officials painted an optimistic picture of July's results, citing an improvement in sales excluding those to rental companies, government agencies and other mass purchasers. The auto maker said its July retail sales climbed 7% compared to June, representing the second best retail month for the auto maker this year. The auto maker is looking to lessen its reliance on unprofitable sales to so-called fleet customers.
Fleet sales are probably one of the worst kind of sales an automaker can get in to. Usually fleets simply diminish the residual value of vehicles tremendously; as they flood the market with an abundance of used vehicles 2-3 years after the purchase.

That basically means that the re-sale value of that Taurus you bought is crushed when you try to re-sell it because Hertz and Avis are dumping theirs as well. So, the supply of used Taurus' in the market is greater than the original supply of new Taurus' a few years earlier (because the vehicles sold to Hertz and Avis originally were never actually part of the open supply). But, generally, demand for those same vehicles (but used) hasn't drastically increased either.

posted by Charles @ Monday, August 07, 2006