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February 7, 2008
Folks, I hate to be the bearer of bad news, but when AutoNation, the nation's biggest auto retailer, reports its earnings in the fourth quarter were down 31 percent, there is no point in burying our heads in the sand.
According to the Associated Press, the company said its results were pulled down by lower sales in California and Florida which account for a staggering 20 percent of industrywide new vehicle sales. The slowdown in the housing market in those states has rippled down to a slowdown in pickup sales.
AutoNation CEO Mike Jackson said he expects U.S.sales to fall to about 15.5 million vehicles this year. That's down from 16.2 million last year - which was down 2.5 percent from 2006. Goldman Sachs has forecast sales of 15 million units.
At the same time, Jackson said the recent 1.25 percentage point cut in interest rates - the Fed cut the bellwether federal funds rate by 0.75 percentage points on Jan. 22 and and a further 0.50 percentage points on Jan. 30 - to three percent, combined with the proposed economic stimulus package bode well for sales later this year.
Sure hope so. In the meantime, these are tough times for the auto industry - and everyone else.
Posted by Peter C. T. Elsworth 
at 12:25 PM to commentary
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