The auto sector crashing downward – real estate to follow the same pattern affecting the economy like never before
Mike Moran
Oct. 31, 2006

Ford plans to cut North American output by up to 12% in the first half of 2007. Dura became the latest auto-parts supplier to file for Chapter 11. The saga goes on and on. German car manufacturer Dymler Chrysler is planning to get rid of Chrysler unit as soon as possible. GM is riding the false ‘hope’ of ‘high’ while the bottom line is being challenged by the Japanese car makers.

The auto sector crashing downward. The reason behind the total collapse is what the American auto makers did just after nine-eleven terror attacks. They started an unprecedented approach of ‘giving away’ cars at zero percent interest. People went crazy over the same and bought cars when they really did not need the same. The worst came after that. The car companies employed worst collection methods for collecting the monthly payments. These agents threatened to repossess cars with a month or two delay. They hassled common people by repossessing cars. The Japanese companies were actually worse offenders in these tactics.

People today think two times before buying new cars or leasing the same. First, you have to pay full insurance (collision included) on something that can be repossessed anyway! Secondly, what is value of a new car after three years?

People are refusing to buy new cars any more. The car prices will slump by 30 to 40% from here. But the worst will come when Chinese car manufacturers bring in cars in the price ranges of four to six thousand dollars that can be used for two or three years and then discarded for a new one.

Remember what happened to pens! How long do common people use pens – yes the ball pens. They are cheap and is regarded as a throw away item after the ink is gone. That is exactly what is going to happen to the car industry all over the world.

The real estate industry will follow the same path. Much worse excesses were committed in real estate that the auto sector. The industry will go through a transformation like never seen before. Every one likes new homes. Homes will be built so that someone can live in the same for five years, discard and build another new one. Prices will tumble at least 70 to 80% primarily because of debt burden.

The auto sector crashing downward – real estate to follow the same pattern affecting the economy like never before
Mike Moran
The reason behind the total collapse is what the American auto makers did just after nine-eleven terror attacks.
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