The Average New Car Sold Has $2,702 In Discounts

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1st Gear: "It's Just Seems Like 2007 All Over Again"

We'll be looking closely at auto sales in August to see where the market is going. Slowing down? Speeding up? Holding?


It's important data, but it's only half the picture as we wait to see how much it's costing car companies to move these new vehicles. Are they using subprime loans? Incentives? Leases? Here's the most paranoid take in the AP:

“It could be a disaster later on,” says Morgan Stanley analyst Adam Jonas. “We’re clearly robbing Peter to pay Paul.” He sees sales growing to an annual rate of 18 million in 2017 — then sinking to 14 million a year later. That will mean factory closings, restructurings, and thousands of job cuts just for companies to break even.

Numbers in the report show a 12.7% year-over-year increase in subprime loans and an average discount a hare above $2,700 per car, mostly midsize and compact cars.

Taken pessimistically you're looking at a market that's setting itself up for failure, that's hiding major problems. I don't quite see it that way as I suspect there's a large portion of the population whose prospects and current income are better than their credit, and who need a car to get to the job they just got. At least I hope that's what's happening.


2nd Gear: How Good Will August Be?


The first hint we got at August sales was from Chrysler with sales up roughly 20% year-over-year, which is like their 900th month of sales increases or something. They also predict SAAR of 17.4 million, which would be huge.

Most analysts don't see a huge increase coming but something steady and decent with a few winners and losers.


We'll see.

3rd Gear: U.S. Compacts Beating Japanese Rivals


Did you ever think you'd see the day? We all know the Mazda2 was never going to do amazing sales here, but the Chevy Sonic and Ford Fiesta are besting their Japanese rivals from Honda and Toyota to take the #2 and #3 spots.

This makes sense. Besides being an American car (some people like American cars), the Chevy Sonic is a fine vehicle that I'd definitely take over any ToyoScion in its class. Same for the Ford Focus. Would I take either over a Honda FIt? No, but I'd take any of those over a Nissan Versa and, as the WSJ points out, it's the most popular car in the segment.


Still, while these cars aren't profitable, giving someone young a good buying experience means they might return when it's time to buy something significantly profitable.


4th Gear: Audi Wants To Sell 1.7 Million Cars This Year


Where's the action this year? Germany luxury cars. Mercedes, BMW and Audi all are within spitting distance of one another.

How close? Mercedes is at .91 million, Audi is at 1.01 million, and BMW is in the lead at 1.02 million. That's a decent month in China's difference between the top two and Audi's CEO has some words about their future, saying they expected 1.7 million cars sold this year, and in established markets like the U.S. and only one emerging market: China.


Of course, at this point, maybe it's no longer right to call China emerging.

5th Gear: Are Aston Dealers The Next Casualty?


The government is actively trying to kill Aston Martin by refusing to let them sell cars built after a certain date that don't meet federal side-impact safety standards.


Yes, it's bad that Aston Martins are so old they're not up to modern standards, but it's a small company and it survived the recession and they're just looking for a break until they can get back on their feet and go back to doing the important work of building new cars for millionaires.

Reuters is reporting on what happens to dealers in the U.S. if Aston doesn't get the exemption:

Walker, who sells Aston Martin cars in the Washington, D.C. area, said that a "substantial number" of 530 jobs linked to U.S. dealers would likely be lost if stores close. Dealers stand to lose 25 percent of their sales volume in the short term, pushing many into the red, he told regulators in a letter.


C'mon, NHTSA, give these folks a break.

Reverse: The Buzz-Wagon!

On September 3, 1900, the first car ever made in Flint, Michigan makes its debut in the town's Labor Day parade. Designed and built by a county judge and weekend tinkerer named Charles H. Wisner, the car was one of the only cars built in Flint that did not end up being produced by General Motors. In the end, only three of the Wisner machines were ever built.




Neutral: Are You A Pessimist Or An Optimist On New Car Sales? Is this a sign of lazy automakers or busy workers?

Photo Credit: Getty Images

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