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Credit downgrade foretells auto stock crash Automotive News reports that the United States credit downgrade has wounded not only the Dow Jones and S&P 500 as a whole, but has made it hard for United States car makers, dealerships and supply chains. A less than responsive market and lack of demand have sent investors running for the exits. GM, Ford Motors and others lost as much as 8.5 percent in share price. Auto stock drop is widespread The Dow Jones went down 3.5 percent to 11,044 by mid-afternoon on Monday. A four percent increase was shown in the S&P 500. These drops dragged GM stock down by 8.5 percent and Ford by 8.1 percent. The largest dealership chain in The United States is AutoNation. It dropped 5.3 percent in its shares. There were even more drops with a 6.8 percent decrease at Penske Automotive Group, 7.6 percent decrease with CarMax and 6.1 percent decrease with Group 1. There was a problem with auto part companies too. The auto stock crash brought on it to crash also. Combined with the difficulty caused by the Japanese earthquakes and tsunamis of 2011, top performers on the S&P 500 were down more than 8 percent in early afternoon trading. There was a 7.6 percent drop that Magna Internation showed. There was also a 12 percent total drop in Federal-Mogul Corp. and Meritor Inc. the double-dip. Revenue dropped 0.3 percent although net profit increase from 42.3 million to 42.5 million, or 0.6 percent, in the second quarter for Dollar Thrifty Automotive Group Inc. (DTG). There won’t be a merger any time soon with Dollar Thrifty and Avis Budget Group Inc. (Automobile) or Hertz Global Holdings Inc. (HTZ). Still, all of the companies cooperate with one another regularly. What to do? McAlinden works in Ann Arbor, Mich., as the Center for Automotive Research’s Executive Vice President. “It’s tough to say how hard they’ll be hit by this decline, but it’s not good,” he said. “If we continue this slide and dip below 10,000 on the Dow Jones, we could be heading back to whence we came.” McAlinden pointed out that as the overall industry drops, demand for automobiles does the same. This would be a severe hit if demand falls back in the 11 million sales levels,” he said. “That’s not good for suppliers and, once again, capacity and jobs would be cut.” Some things dropping in price There has been a drop in commodity prices, with might be the only good news to the tough


economy. A drop in steel and aluminum costs is expected soon. Also, the prices of crude oil are as low as they were in 2010. A decrease in the costs at the pump is expected. That should offset some of the demand problems. Yet as McAlinden warns, the waters will likely remain muddy for a while. “A dollar-a-gallon plunge would leave a consumer confused in the midst of stock market uncertainty,” he said. “Everyone is going to have to sit tight for a week or two and see how this thing plays out.” With Kennedy Mazda Valparaiso you’ll receive the most perfect sports car buying experience achievable. So take a look at Kennedy Mazda! Searching for a wordpress plugin menu? For further details, Visit Credit downgrade foretells auto stock crash

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