Ever since he lost out on a bid to take control of GM (GM), Carlos Ghosn has seemed a bit punchy. His golden touch at Nissan and Renault have failed him. The companies are no longer considered paragons of the turnaround art. Ghosn has become ordinary.
He was especially ordinary in his recent assessment of the US car market. According to Reuters, "If we take the trend of the market in May and June it looks like we are going to be much below 15 million. Now I’m not sure if this is going to continue for the rest of year," Ghosn said. "We are preparing ourselves for the worst."
All of that seems fairly obvious.
What is less clear is what it means when a car company which makes mostly small sedans is becoming more worried. Big US vehicle manufacturers depend, to a large extent, on SUV and pick-up sales. Gas prices have destroyed that market. The consumer move has been toward lighter cars which get 30 mpg or better.
Ghosn is sending a signal that even tiny cars are not selling well. The US consumer is willing to keep his old vehicle. He does not want to take on more debt, or his buggy is worth less than the balance of his car loan.
Whatever the reason, US car sales could be headed as low as 14 million this year. For US car companies, recovering from that would be quite a trick.
Douglas A. McIntyre
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