Sea change in the auto industry.

[R W Burgess]

Charlie, excellent point.

Our region is, in fact, suffering from that experience right now. We lost a major annual work show sponsor this year, a car dealership....paid us about $200.00 each year.

To make matters worse, they dropped their newsletter ad too.

Please keep in touch with your sponsors, keep all avenues open.

Wayne

[charlier]

Wayne, sorry to hear about the loss of your sponsor.

In the past, I know that some auto makers had various programs where marketing dollars were made available to dealerships to support them when it came to community events or other events where the auto brand could be promoted to potential customers. The details of these arrangements varied depending on the automaker.

Unfortunately, when there is a down-turn in auto sales, marketing and sales advertising budgets tend to be the first to be cut.

I agree with you Wayne, that Communication with sponsors is very important in challenging economic times.

During times like these, it is VERY important that sponsors know just how important their support is to an event and/or organization.

[Dave@Moon]

<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body"> I don't know about you but I'm thinking it's time to buy an electric golf cart for street use. </div></div>

<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">It might be. Let's hope more than 2 or 3 companies are preparing to provide you with one.

</div></div>

Here's your chance!

Global Electric Motors, a Chrysler Company

They had a GEM e4 on display at the Ault Park Concour today. Approx. $9600.00 base price, approx. $19,000 as shown (loaded to the gills!). Made in North Dakota!

[Matt Harwood]

How about the folks who bought a big SUV say, two years ago, when they thought that $2 gas was affordable? Now they're completely upside-down on their big trucks (a friend of mine was offered $3800 for his 3-year old Explorer on trade) and have to keep paying for something that is worth a fraction of what they paid for it, AND keep feeding it.

The banks and finance companies who underwrote the leases on big SUVs are probably going to suffer something akin to the foreclosure crisis when these vehicles start coming off lease and are completely worthless. They'll be losing $0.50 on the dollar on every single one.

I <span style="font-style: italic">almost</span> feel bad for those GM dealers who, if they wanted a [formerly red-hot] Hummer franchise, had to build a state-of-the-art standalone showroom/service center with an off-road course out back. Our local Cadillac dealer spent something like $13 million building theirs on a prime chunk of real-estate. It's quite beautiful, especially with 500 colorful new Hummers gleaming outside. They'll look lovely as planters. I suspect this SUV market crash will take a lot of regular car dealers with it. I doubt this long-serving Cadillac dealer will survive with that kind of debt:income ratio by selling only Cadillacs (where most of their profits were generated by--<span style="font-style: italic">you guessed it</span>--big profit margins on big SUVs).

Maybe these big SUVs could be turned into portable homeless shelters or something.

How could major car companies be so short-sighted? Even the Europeans were caught with their pants down thinking the SUV gravy-train would go on forever. Many even built factories here in the States to build big SUVs, not cars. It's expensive to build cars in Europe and with the Euro being so strong against the dollar, they can't afford to sell even "cheap" small cars here at any kind of competitive price. Even Volkswagen dumped their $17,000 Rabbit or Jetta campaign because they were losing money on every single one. The new VW Tiguan, which was supposed to compete with the Toyota RAV4 and Honda CRV, will probably cost more than $30K. Good luck selling those, guys.

This is only the beginning. If it ain't a recession yet, it will be...

[Guest Skyking]

<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: Matt Harwood</div><div class="ubbcode-body">

This is only the beginning. If it ain't a recession yet, it will be... </div></div>

Matt, I'm afraid this is going to be more than a recession.

Back in the thirties people could go without because they really didn't have anything. Today we have everything under the sun. Alot of people just won't survive this one.

[Guest John Chapman]

<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: Dave@Moon</div><div class="ubbcode-body"> Are you then implying that I used faulty logic? Have I used any logic?</div></div>

Dave, you have presented two questions for the ages... I'll leave the issue there.

As to who would buy a Range Rover today.... er, ALF1, lest we forget.

Cheers,

JMC

[Guest John Chapman]

<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: Skyking and Matt Harwood</div><div class="ubbcode-body"> This is only the beginning. If it ain't a recession yet, it will be... </div></div>

I think this is way too pessimistic. Yes, it's gonna sting. Yes, the 'fleasing' companies are going to get hurt. Payback is a [censored] <span style="color: #3333FF">(Author note: Substitute five letter word for breeding female canine... Love Auto Censor, I do!)</span>, eh? So, are we going to scrap all the SUVs in the current inventory? Nah... here's why.

As noted above, the owner of a three year old Explorer was offered $3800 for his car. Here I will make some assumptions:

-- Explorer was in good running order with ~50K miles.

-- Dealer pays $3800 and sells it for $5500 to unload it.

-- Compared vehicles purchased for cash.

-- Fuel availability will continue as now.

Using the EPA website and setting gas at $5/gallon, driven 15K miles/year, the 2005 Explorer vs. 2008 Prius:

Explorer/ Prius

Cost - $5500/ $26,000

Tax - 600/ 1,800

Cost - $6100/ $27,800

36 mo Gas - $13,500/ $4,900

36 mo Ins - 4,000/ $8,000

36 mo Exp - $17,500/ $12,900

Deprec. - 4,500/ 8,000

Total 3yr - $22,000/ $20,900

Opportunity Cost of purchase cash 36 mo @4%: $762/$3469

Total Cost:

Explorer: $22,762

Prius: $24,369

So, if we put aside ecological considerations, there's a lot of folks out there that will buy these gas hogs for the relative transportation value. The affordable upfront cost outweighs the higher operating costs over the relative short term. These SUVs will be driven to the end of their utility life. Many will be scrapped earlier than usual because of accident or repair cost exceeding salvage value.

These economics are kissin' cousins to the junior commercial pilots I worked with in the late 70's/early 80's who bought discarded fuel hog Caddies, Buicks and Lincolns as 'airport cars' for $500 and drove them 'till they died. That's another whole culture, though.

One thing that is frequently overlooked in MSM is the 'manufacturing equity' represented by the operating fleet. That has a significant value for durable goods.

The Hummer dealers are just SOL.

Cheers,

JMC

[R W Burgess]

John, I was just thinking yesterday that driving my new purchase, a 1981 Regency 98 coupe, on the highways this summer will have some accusing me of wasting this country's resources. They never realize that I'll be lucky to drive it 1000 miles this year. At 5.00 per gallon and 20 mpg, that's only $250.00 or 50 gallons of gas.

Guess, I'll have to purchase a pistol to protect myself.

BTW, I still see the local McDonalds drive-through lines every evening. Evidently, some still think it's cheaper to eat out. Ummm, maybe they don't have a cook at home.

Wayne

[Reatta Man]

All,

I'm going to start a new discussion called "Hydrogen Generators for Cars" after completing this post. Please review to see if there is a workable solution to this issue just a matter of months away.

Joe