Car Sales Soften Just a Bit

Car sales edged down, but there’s no disaster in the aggregate.  (That’s a warning that disaster is to be found in the details.)

Last month’s car and light truck sales were off from February, but the trend is nearly flat.  No big problem, no sign of the housing bust spilling over into consumer spending.  Detroit nameplates were down, Japanese brands were up.  Welcome to the broken record department.

Consumers are looking for smaller cars, especially hybrids, turning up their noses at big trucks and SUVs.  Chrysler, according to the Wall Street Journal, has been getting 75 percent of its revenue from trucks and SUVs.  The Japanese brands are gaining customers, albeit with a bunch of incentives.

Detroit isn’t geared up for the Trial and Error Economy.  They make plans, they produce to their plan, then ship the product to their dealers–even if consumers want something else.  A Trial and Error Economy company would have the flexibility to shift to meet consumer needs.  That’s more expensive, sure.  The extra expense isn’t justified if consumer tastes are stable.  But look at the numbers–consumers are changed their tastes once again.  Time for someone to rethink the old strategy.

Business Planning Implications:  if you feed the auto supply chain, be very cautious about the part of your business selling to Detroit brands, and to the products that go into big trucks and SUVs.