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Deal, no deal
Deal, no dealDiscouraging data about the state of the automobile industry was released last week. The opening adjective hardly does justice to what is going on in a backbone industry of the U. S. economy.
The decline in auto sales will very likely be felt locally, with the shock wave reverberating across Fauquier County.
In September, Chrysler, Ford and Toyota sold less than 70 percent of the cars and trucks that they moved off showroom floors in September a year ago.
Sluggish sales partially reflect the general public's reluctance to buy big-ticket items with the economy in such disarray.
“Very few people are looking to buy because they’re unsure what’s going to happen,” an executive with a local car dealership told us last week.
In large part, plunging sales also indicate consumers' inability to get credit, exacerbated by the Wall Street meltdown.
"It’s harder to get a loan than it was six months ago and six months ago it was harder than it was 12 months ago," the car dealer lamented. "Banks are not looking at things as they did in the past. And a lot of them don’t have money to lend.”
If you had a pretty good credit record a year ago, you had about a 90 percent chance of getting a car loan, according to industry calculations. That has fallen to about 60 percent today. If your credit history was not quite so sterling, you had about a 60 percent chance of nailing the loan a year ago. Today, your chances are a about one in 10.
Housing has been in the doldrums for 18 months and more, even if Fauquier County has been relatively unscathed as compared to much of the rest of the country. In many respects, the downturn in car sales is more worrisome because it is unlikely that it will not treat us so kindly.
Our housing market is somewhat insulated from ups and downs, at least their extremes. But we are exposed by our need for vehicles.
Many of our residents are commuters. They need good, solid transportation on which they can depend. Other than that, Fauquier's sheer size — 660 square miles, and some 60-plus miles from Goldvein to Paris — increases our dependency.
Being unwilling to buy a car because of nervousness over the general economy is one thing. Most would call it prudence. Being unable to buy a car because of a vanishing credit market is something else altogether.
The health of the auto industry is an important national issue; it directly employs hundreds of thousands of men and women and indirectly employs millions more.
It is a state issue; every new car sold adds a pile of money to the state's coffers through sales taxes and fees.
It is a local issue; Fauquier car dealerships provide jobs for a number of people who, in turn, spend their paychecks locally in support of other businesses. More than that, car dealerships are deservedly lauded for their local philanthropy. Worthy causes can always count on their support.
After all the hand-wringing and night sweats, Congress has passed a bailout bill, and credit will start to flow, or so the theory goes.
Would that it were so easy to address the more fundamental problems — housing prices still in free fall, and many, many more headed to foreclosure; Detroit's sluggishness in producing cars and trucks that are more realistic for a constrained new world; our financial inability to muster a second bailout.
And the first one is so flawed, anther will almost certainly be necessary.
Many respected economists reckon that only about half to two-thirds of the houses that will fall into foreclosure have done so. Where we are going to find the money for round two of a Wall Street bailout is anyone's guess.
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