Ford + Toyota + GM have seen a haircut in their sales for end of summer, as CNBC reported today. Why is GM trying to IPO? Oh right, these are the same people that ran the world’s biggest car company into the ground. Don’t they learn? Let’s compare a good car company (Ford was so good they didn’t take the bailout money they were offered) to its underlying economics.
Ford vs Auto Sales
Here you see Ford traveling up with its underlying economics, and beating it even. It’s come back to earth at the end of summer, and if auto sales will slump more, that will only exacerbate Ford’s fall.
Ford vs S&P 500
Here you see a high correlation between Ford and the S&P, both up and down. That’s called Beta risk kids. So wherever the market goes, Ford won’t be too far behind.
The economic charts tell the real story. But according to GM VP Don Johnson, “All things considered, the auto market still looks strong.” He also stated today that “I think the economy still looks strong as well.” Maybe someone should show Don the Auto Sales Lever long term”
US Auto Sales 1960-present
Auto Sales have fallen off a cliff, to levels not seen since the early 1960s. This is what you call a smoking gun.
So why is GM going public?
p.s. I could contrast Toyota charts here, but I will let them off the hook, because TM’s fall off is tainted by the company’s fundamentals (i.e. quality control issues).