Acres of cars and nobody wants them

Carmakers had to lease extra land for the growing stockpile


Acres of cars and nobody wants them

It’s a sight depressing enough to convince even the most optimistic economist that we’re plunging into a global recession. Row upon row of thousands of cars, worth millions of dollars, just sitting there, unwanted. They’re reportedly piling up at the Port of Long Beach in California, where major carmakers have been forced to lease acres of extra space to store them.

It’s not just cars that are piling up. Growing inventories of supersized flat screen TVs are forcing retailers to slash prices, according to analysts. Meanwhile, in China, there is more than a year’s supply of appliances sitting in warehouses destined for nowhere. That few people are buying new products for their houses isn’t surprising—after all, in the U.S., the inventory of unwanted houses is building up too.

Across the continent, all kinds of goods are being stockpiled as orders shrink, says a report from the Institute for Supply Management. “It appears that manufacturing is experiencing significant demand destruction as a result of recent events,” wrote the ISM’s Norbert Ore. That’s bad news for the fate of the economy. “Inventories are pretty much the best way to predict a recession,” says Daniel Trefler, a professor of competitiveness at the University of Toronto. A buildup in inventories typically marks the beginning of an economic downturn, he says. “It’s a very strong signal.”

This pattern has some concerned about the more ominous threat of deflation—a period of declining prices and income levels. That will be “the next major macroeconomic theme,” David Rosenberg, chief North American economist at Merrill Lynch, wrote in a report to clients. But in the short term, the glut of increasingly cheap, unwanted goods isn’t necessarily all bad. For shoppers, it could mean a little extra money in your pockets. Enjoy it while you can.

Filed under:

Acres of cars and nobody wants them

  1. Hmm. Folks getting by with their old stuff and resisting the debt-financed consumerist urge to buy the newest stuff. And this collapses our economy. Maybe, just maybe, our economy needs this head-shake. Maybe, just maybe, we should not steal from the next generation (billions of non-existant government $ for –cough — stimulus) in order to prop up the insane foundation of our current economy.

  2. I tend to agree with you, MYL. The current catastrope ought to serve as a moment of creative destruction, where we can question everything from our consumerist ideology to energy use, and so forth. I doubt it will, but it should…

  3. I think people on every part of the political spectrum can agree that a slower, more stable economy might be better than a high-debt, high spending, high growth economy.

    Unfortunately, there are also people on all sides of the political spectrum that disagree with this.

  4. If the downturn lasts for a long time (two years or more), then people might change their buying habits. But if it’s brief, expect a return to consumerism, and with a pent-up demand once confidence has returned.

  5. The bailouts go through and I will protest the only way available to me–I will completely and utterly boycott North American made cars the rest of my life. Rape me for my tax dollars now government people, I will be buying overseas made cars going forward.

  6. I’m really quite tempted to go to my local GM dealer and offer $15,000 in cold hard cash for one of their 2009 Cadillac STS’s. The only reason I’m hesitant right now is that I don’t want to be laughed at too much by a salesmen or his handler. Ditto to the Benz dealer for a 2009 E-class or S-class series. What do you think are my chances of having them accept that offer today? What about next month? The 2nd quarter of 2009? Summer of 2009? There has to come a time when CASH becomes absolute ruler……..some cash flow, even a little bit, is better than negative cash flow for dealers and will become necessary somewhere down the road. When they start selling off premium cars at 20 cents on the dollar I’ll be first in line. So, I’ll merely be patient and just wait on the sidelines until then. Hey, I’ll even take one with only a 1/4 tank of gas and no floormats.

  7. George you’d probably walk out with a new car

  8. Or even drive :)

  9. For shoppers, it could mean a little extra money in your pockets. Enjoy it while you can.

    Oh, I will. My life will immeasurably improved by watching more teevee on a really big screen or by taking even more rides to nowhere in a new car.

    I bought everything I needed ten years ago and most of it’s held up rather well. I’m in my mid-40’s now and I don’t want to shop anymore.

  10. the power is coming back to the people and the small time business owner.

  11. If the N A car makeres get tax money to survive than I will never buy another N A car—period period period ditto

  12. Once beaten, twice shy!

  13. I took the car into the GM dealership for an oil change Saturday morning here in Belleville, ON. As I was driving up the two-lane highway with the huge dealership on the left and ANOTHER GM dealership on the right (crazy, but true), I couldn’t help but notice that fewer cars were on both lots. I entered the sitting area and felt this “dead-men-walking” aura in the place. It was uncomfortable. Sad, too. Don’t get me wrong, I’m not shedding tears for the Big 3. They’ve brought in on themselves, and the unions have lived large for too long. Perhaps, they’ll need this bottoming-out to return to a more sensible financial approach. Who knows?

Sign in to comment.