Author and blogger,Vince Lewis, updated his post (Unsold Cars) on unsold new car inventory recently and it does not make the claim of recovery seem very promising or real. Picture after picture, view-able on Google Maps even, show huge lots of brand new car inventory just sitting in the sun or rain in the UK.
There are also see views in Port of Baltimore, Md. where there is another chunk of inventory spread over many acres. Another large unsold inventory sits beside the Nissan plant in Sunderland, UK. There are large chunks in Spain, Italy and even Russia. And these are not luxury vehicles but rather cars that the average person should be able to afford, through bank sponsored financing of course.
Nevertheless, if this recovery were actually happening then why this huge, global stock pile? Could it be that the world economy is shouting out loud that by and large there is no money to spare on purchasing new in the average family’s budget?
Even China is Feeling the Pinch
The Chinese auto industry has grown tenfold in the last decade to become the world’s largest, looking like a formidable challenger to Detroit. But now, the Chinese industry is starting to look more like Detroit in its dark days in the 1980s.
Inventories of unsold cars are soaring at dealerships across the nation, and the Chinese industry’s problems show every sign of growing worse, not better. So many auto factories have opened in China in the last two years that the industry is operating at only about 65 percent of capacity — far below the 80 percent usually needed for profitability.
The Looming Problem
The underlying problem is not just the millions of unsold cars building up around the planet. It is the need to continue manufacturing new cars despite the fact that inventories are building to remarkable levels. If the auto industry adjusted their manufacturing to meet actual need, they would have to close plants and lay off thousands of workers further exacerbating economic decline. This would in turn produce a domino effect in the steel industry and parts industries where car parts are made and result in additional tens of thousands more layoffs. Where would the recovery story be then one has to wonder?
Meanwhile, sales of high end cars like BMW, Ferrari, Porsche, Mercedes, Rolls-Royce have shot up 80% while the inventories of the lower priced more affordable cars sit and waste away. This points to a further stratification of the natural distribution of wealth which always occurs under Marxist oriented socialist systems which are growing as governments “democratize”.
What a Waste!
A more insidious issue here is the waste of human effort and valuable resources. When a new car is left idle:
- Oil sinks to towards the bottom of the engine.
- Normal weather conditions wear on the unused and unprotected engine parts
- Condensation begins to build up in the cylinders producing rust in the bores.
- Over time, unless these vehicles are professionally freed they will seize when started.
- The batteries start to lose their charge.
- Tires lose air.
- New paint finishes begin to lose their luster and oxidize and more.
Fact is, unless a vehicle is taken care of it will simply deteriorate into waste.
After a few years of sitting there will be no alternative to either crush these never owned, new vehicles or dismantle them (at least some of them) for parts. But for now, the inventory build-up continues. All to promote the illusion that there is a recovery. Like the illusion and economies built on monopoly money like the Federal Reserve note, it cannot last. The jig will one day be up.
Meanwhile, keep your eyes open and take precautions. At some point, signs like these that are being shut off from the public eye by a media more interested in Miley Cyrus, American Idol or gay football players, will be recognized for the reality they actually point to.