Perfect Timing

Pick-up trucks sell to men and so the Big 3 automakers make sure to pre-buy a lot of commercial time in the NBA Finals to sell the trucks.They obviously didn’t figure that gas would be selling at $4 a gallon when they bought the $millions worth of commercials. You’d think they might use the time to sell their small high mileage cars, but noooo. There is not enough margin in a Ford Focus, so here they are trying to sell the $50,000 F-250 Pick-up when nobody wants them.

Ford Motor and Chrysler expected to find themselves in a hard-fought showdown when they rolled out bigger, brasher pickup trucks this fall, hoping to enlarge their shares of a segment that has brought them huge profits.

Instead, Ford, Chrysler and General Motors have discovered $4-a-gallon gasoline and a housing slump to be more formidable foes. This year’s battle will be for pieces of a much smaller pie than they ever imagined.

A couple of months ago, I did a piece about how Shell Oil’s scenario planning unit, helped them get ready for a world of peak oil. With all the layers of management at Ford, GM and Chrysler, wasn’t there anyone doing strategic planning for a world of $4 gasoline?

It’s obvious to me that the $600 checks sent out by the government this month are not going to turn around a coming recession. Wal-Mart’s same store sales rose 3.9% in May ,a good bit better than expected. They cashed $350 million of rebate checks during the month. Over 20% of WMT’s regular customers don’t have checking accounts. On the other hand, Gap’s sales were off 14%. It says to me this is a one month push and it’s only going to help the bargain basement retailer.


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0 Responses to Perfect Timing

  1. Ken Ballweg says:

    Stimulus checks were about as sensible as the proposed gas tax holiday: i.e. pretend you’re doing something so the rubes don’t hold you accountable on your watch.

    Worst of it is, you can’t really live in an F-250 if you have a family. Oh well.

    Housing fall down go boom. Big Three fall down go boom. Steel long ago fell down went boom. Oil soon go fall down go bust. Manufacturing and knowledge industries moving offshore. Medical and Military are the only thriving industries, and as Medical prices itself out of being a perk of employment, it may find it’s bled the turnip a little too much. Agro looking at drought and overcommitment to subsidized ethanol and really going to peak.

    Jon, you talk about “peak oil”, how about peak consuming, and the impact on markets?

    Perfect storm a comin’, and frankly it’s something this country needs. The risk is that there is a large element that is ripe for fascism (see prior day’s discussions) of the old fashioned rather than the hyperbolic political slur type and to me that is a bigger fear than a major depression or recession.

    What rough beast slouches…???

  2. Michael Spencer says:

    Aside from the inevitable damage done to the overall economy, detroit just plain deserves what they are getting. For years they fought CAFE standards- which creates a level playing field by requiring all to abide- and instead never ever looked to the future. The imports are eating their lunch- a sad thing to watch, but just plain deserved.

  3. Dan says:

    I am a mediocre guitar player in a blues band. The bass player, a guy I’ve known several years, is the classic blue collar Democrat. Replete with mullet and facial hair. (But a hell of a nice guy.) He drives big pickup trucks. It’s embedded in his personality. He recently decided his last truck was old and busted and went shopping for a new one. He was a little surprised to find out how easy it was to strike a deal. I suspect that he could have struck an even better deal if he’d walked off the lot and made them call him.

    And when gas hits $10 a gallon, I suspect that he’ll start to rethink the I-have-to-have-a-big-pickup facet of his personality.

    By then, even my 25 mpg CRV (I really do need it to haul stuff around, I swear!) may have to go. I shudder to think of shoehorning a guitar amp, a guitar, a gig bag, a PA amp and mixer into a hatchback.

    But we’ll all be making adjustments.

  4. Brian says:

    Wal-Mart included fuel sales in the same store numbers and didn’t break them out, therefore the % gain includes inflated gas.

    We’ll be getting our bribe, er, rebate check soon. Goes right to paying off credit cards. I figure we’ve slashed our personal deficit spending by $100 a week. Not much, but we were frugal to begin with.

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