If you take an off-the-cuff glance at the early numbers, you might think the auto industry is recovering to a point equivalent in position to that of pre-recession levels. These early numbers show a rise in Ford Motor’s revenue with a 3rd quarter profit of almost $873 million and a 5-percent rise in sales compared against this time last year. GM and Chrysler are still endeavoring to achieve profitability, and still could finish up on the slicing block of an insolvency court inside a few years.
Their attempts at cost cutting and union talks have not had a meeting with as great a hit as Ford’s achievements have. The auto insurance industry has shown increased profits thru the bigger number of imperative crash packages needed by corporations leasing or selling autos on credit. Both the automobile industry and the automobile insurance industry are enjoying a secondary benefit from the Money for Clunkers program.
The program led on to increased new auto sales by requiring the autos traded in thru the program be annihilated. This led to a decrease of availability in the used car market, leading to heavier prices on used autos. This price increase inspired folks to buy a new automobile instead of going with the used car they usually would have bought. Considering the lookout of the shopper economy, it’s tough to be persuaded that these numbers mean a recovery for the auto industry. The Ford Motor Company looks robust on the surface, but looks can be fraudulent. Only 0.33 rd of their 3rd quarter profits derive from the Money for Clunkers program and the new 2010 auto lineup. The 2008 gas fiasco led straight to folk holding off purchasing new cars with hopes the 2010 models would have more M.p.g than now available models.
Plenty of other folk held off in the hope of fairly priced compounds and new fuel autos. The other two/third of the profits came from reduced material costs and union concessions, leading to a windfall of roughly $500 million. The $200 million Ford saved on material costs took $200 million out of the general American economy. The $300 million Ford saved in work costs led to stagnated salary for employees at a point when the basic requirements of employees like housing, medicare, transport, and food keep on rising at extraordinary rates.
The rosy commercial outlook that company America is painting may be wonderful for them, but it’s not looking so good for the common employee. It is clear to almost anyone that takes more than an off-the-cuff peek that something is seriously wrong with the commercial health of America, and a single auto company won’t change that at any time in times to come.