Filed under: Industry, Ford Motor (F), General Motors (GM), Recession

The U.S. automobile companies make more money on SUVs and pick-ups than they do on low-priced sedans and coupes. That’s old news and hardly worth repeating, except alongside the word that inventories of these trucks is piling up.

According to the AP, “Used SUV sales in March were down 14 percent nationally compared to last year.” When used cars don’t sell, neither do new ones. Used vehicle dealers will cut prices to move supplies of SUVs, which they can’t hold because they need cash-flow. An abundance of affordable, cheap trucks will be attractive to those who need a replacement automobile during a recession. That leaves new automobile dealers and firms like General Motors (NYSE: GM) and Ford (NYSE: F), which supply them in a bind.

The price of Ford’s stock moved up sharply last week when it posted better-than-expected earnings. Almost all of that gain disappeared the next day when analysts became more clear-heading about the continuing drop in Ford’s sales.

That drop is about to get much worse.

Douglas A. McIntyre is an editor at 247wallst.com.

Share This

Share This

This entry was posted on Monday, April 28th, 2008 at 4:15 pm and is filed under Industry News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.