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Friday, July 01, 2005

Who is the real McCoy?

I doubt Econbrowser assessment of the auto industry despite being an excellent blog (fully recommended!).

GM's increase in sales seems more the result of the desperate move of giving employee discounts to clients than healthiness of overall demand. Chrysler already announced they are matching this discounts.

Econbrowser: GM auto sales strong in June: "June 27, 2005
GM auto sales strong in June
...one feature of past oil shocks that contributed to an economic downturn was a sudden change in consumers' car purchases. But the latest indications are that U.S. automakers so far at least are not experiencing the same kind of problem this time around.
Automotive News (subscription required) carried this story today:
Analysts: June is sales home run for GM
General Motors, spurred by its program of employee discounts for everyone, is the runaway U.S. sales winner in June, several industry analysts say. Estimates of GM's sales gain for the month range from 26 percent to more than 30 percent over June 2004.

This would seem to lay to rest concerns arising from GM's weak light truck sales and plans announced earlier this month to eliminate 25,000 jobs. "