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Dire straits

Posted at 5:43 PM on November 3, 2008 by Bob Collins (3 Comments)
Filed under: Economy

New data out this afternoon says the U.S. auto industry suffered its worst month of car sales in more than 17 years last month.

"This is clearly a severe, severe recession for the U.S. automotive industry and something we really can't sustain," said Mike DiGiovanni, General Motors Corp.'s executive director of global market and industry analysis who said the government should speed up actions to thaw out frozen credit.

Tucked in the analysis, however, is a factoid contributing to the problem: The cars being built these days are too good.

Emily Kolinski Morris, Ford's senior economist, told a conference call with reporters that because automobiles are more durable than in the past, people can wait without buying a new vehicle until they feel more confident in the economy.

In the past, perhaps, the auto industry could pull the economy out of a slump if people had no choice but to buy cars. Those days are gone.

Comments (3)

This reminds me of one of my biggest critiques of the economy in general, how so much of it is built upon commodities that are designed to be replaced with arbitarily hasty frequency.

Clearly things like food fall into this area and I am not referring to that. But rather mainly to consumer electronics and business technologies. It is perverse that producers of computers, servers, TVs, MP3 players, etc etc need (with a few notable exceptions which prove the rule) to tangibly improve their product over only a few months time, or risk getting completely abandoned for a competitor. But most of the improvements to many of these products are "because we can" rather than "because there is a need".

When the abstraction known as Moore's Law runs into the limits known as the real world, the consequences may indeed dwarf the challenges of today.

Posted by JohnnyZoom | November 3, 2008 9:54 PM

While the cars may not be moving the dealerships must be doing a brisk business in repairs. With engines being increasingly controlled by computers which need *cha-ching* software upgrades and *cha-ching* diagnostic system checks for the single all-purpose idiot light and *cha-ching* replacement when the computer compoenents fail, it's a wonder these cars stay on the roads at all. Cars may make it to 250,000 miles but the engines will need be changed multiple times at big cost. What a rip off.

Posted by sm | November 3, 2008 10:07 PM

Autos are one thing you can thank god they DON'T 'make like they used to'.

Keeping a 1970 Chevy Impala starting, running, stopping (brakes & tires), and existing (rust!) was an absolute pain in the wallet.
:-)

BTW,
Points. Timing light. Distributor. Does anyone remember those? The crappiest communist built low end import is light years better than anything made before 1990.

Posted by TC | November 4, 2008 11:37 AM

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