Auto Results--Should we cut Chrysler Loose?

I looked for some raw data on the auto sales for December, to try to see whether the bailout efforts on the Big 3 Automakers would make sense. Specifically, GM had noted that their lower sales estimates (or "worst case scenarios"), cited a drop in sales to about 10-11 million cars in 2009 for North America, and that they would retain their market share. Ford and Chrysler had similar types of assumptions about the auto industry, and their share of it.

In looking at the results, I am reminded of a line from a Ben Stein book, which I thought was pithy. He said something about relative importance, saying that "if a bear is chasing you, it is less important that you can outrun the bear, than that you can outrun the others in your group..." In this case, it is less important that the companies lost sales, than how they have performed relative to the industry as a whole.

With that thought in mind, lets take a look at the auto results of US Auto Sales (courtesy of Leasetrader.com):

TOTAL AUTO SALES:

December 2008/December 2007: 894,967 / 1,389,757= –35.6%

2008/2007: 13,247,431/16,154,064= –18.0%


Not good. But the almost 900,000 cars sold does translate into about a 10.7 million car sales expectation for the entire year. Given what the car makers have asked for, in their proposals to Congress, they will only survive in this environment if they are taking market share away from someone. But who will gain market share, and who will lose? And should we give money to the losers? Here's the pundit's take on this:

Winners:

Subaru--gaining market share, and actually posting an INCREASE in 2008 of cars sold? Awesome. Although I'd like to see ONE Subaru WITHOUT a bumper sticker...

December: 17,287/18,739= –7.7%
2008/2007: 187,699/187,208= 0.3%

Daimler AG--beating the market both in December and 2008. any coincidence it is doing better after shedding Chrysler?

December: 20,878/27,287= –23.5%
2008/2007: 249,750/253,433= –1.5%

American Honda--Barely ahead of the averages, and perhaps not the strong automaker I had previously thought. Still makes a solid car, though.

December: 86,085/131,792= –34.7%
2008/2007: 1,428,765/1,551,542= –7.9%

Nissan--Like Honda, they have picked up a little market share in 2008 and in December, relative to their peers. Still not the reputational pick of Honda or Toyota, but they continue to outperform the overall car market, by the numbers.

December: 62,101/89,555= –30.7%
2008/2007: 951,350/1,068,237= –10.9%


Losers:

Chrysler LLC--Clearly losing the battle of market share, both in December and overall in 2008. If auto sales across the board are hanging on to the solvency sales line, then any automaker losing market share is toast. Should we consider whether any further loans here are a good investment?

December: 89,813/191,423= –53.1%
2008/2007: 1,453,122/2,076,650= –30.0%


Hanging in there:

Ford Motor Co.--the 2008 numbers show a drop in relative market share, but the December results show that Ford has gained slightly on its competition more recently. For the "best of the Big 3" US Auto company, this could mean staying out of trouble, and off the list of companies begging for a bailout. Time to start "making quality job one" again.

December: 138,325/210,855= –34.4%
2008/2007: 2,002,279/2,559,259= –21.8%


General Motors--like Ford, GM has lost some market share in 2008, but gained on the competition a little in December. Thinning the herd (taking out Chrysler) could have a benefit to Ford and GM, particularly in the Trucks space. A note to GM--Make the most of this opportunity, or you will not get another one.

December: 220,030/319,837= –31.2%
2008/2007: 2,954,819/3,822,611= –22.7%


Some Troubling Signs

Toyota--despite some market share gain in 2008, December was an off month, relative to Ford and GM. Let's keep an eye on this, as the months progress.

December: 141,949/224,399= –36.7%
2008/2007: 2,217,660/2,620,825= –15.4%

BMW Group--same story as Toyota. In this environment, 2008 was a relatively positive year, from a share perspective. However, December was rough, and BMW is barely hanging on to market share in the US.

December: 21,648/33,797= –35.9%
2008/2007: 303,604/336,265= –9.7%

Hyundai Group--Like BMW and Toyota, Hyundai had a tougher December, relative to its peers. They have started to offer incentives, and it looks like they are seeing what we see here.

December: 38,681/70,555= –45.2%
2008/2007: 675,139/772,482= –12.6%


Conclusion:

It's a good thing we are only being asked to give money to GM and Chrysler. In my opinion, it may be time to shoot Old Yeller (in this case, Chrysler). GM has shown some signs that it can hang in there, for now. Chrysler has shown no ability to gain market share, in an industry losing sales. The foreign auto makers may start to think about production cuts of their own. This should only help the US Automakers, AS LONG AS THEY ARE GAINING MARKET SHARE. If
Toyota, BMW, or Hyundai start cutting back in the US, or Honda, Subaru, Daimler, and Nissan start to take on water in the US, Ford and GM are right there to pick up the slack. Chrysler has shown they can't compete with Ford and GM.

I think Chrysler may be on a death watch here. If they come back for more money in March, it could be time to be good parents here, and cut off the prodigal son.