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WEDNESDAY, NOVEMBER 25, 2009
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'Car Bubble' Blows Up on Automakers

Sales were artificially high in boom years; rebound unlikely

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(Newser) – The housing boom brought a car bubble along for the ride, and now that one has burst, so has the other, reports the Washington Post. Thousands of cars are sitting on lots and likely to stay there. “You had a huge number of cars being sold," says Steven Rattner, the head of President Obama’s auto industry team. “So I don't think it is prudent to assume the sale levels are going back to those levels.”

Annual car sales in the US recently topped 16 million. This year they’re likely to fall below 10 million. A main task in restructuring the industry is figuring what would be a sustainable level of annual sales. In the meantime, Toyota has leased a cargo ship to hold 2,500 unsold cars that it needs to park somewhere.

An empty lot is shown at Fremont Pontiac GMC in Newark, Calif., Tuesday, March 3, 2009. The dealership closed due to economic conditions earlier this year.
An empty lot is shown at Fremont Pontiac GMC in Newark, Calif., Tuesday, March 3, 2009. The dealership closed due to economic conditions earlier this year.   (AP Photo/Paul Sakuma)
Unsold 2009 Fits sit at a Honda dealership in Littleton, Colo., on Sunday, Feb. 15, 2009.
Unsold 2009 Fits sit at a Honda dealership in Littleton, Colo., on Sunday, Feb. 15, 2009.   (AP Photo/David Zalubowski)
A sign at a General Motors car dealership is seen in Andover, Mass. Wednesday, Feb. 25, 2009.
A sign at a General Motors car dealership is seen in Andover, Mass. Wednesday, Feb. 25, 2009.   (AP Photo/Elise Amendola)
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Loose credit, incentives, leasing -- it really kind of fed the beast. That made many cars that might have been out of reach affordable. - Jeff Schuster, executive director of forecasting for J.D. Power and Associates.

The big question is, how do you jump-start auto sales again? Or can you? - Jesse Toprak, analyst with Edmunds.com

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TerrifiedCitizen
Apr 3, 09 10:26 AM CDT
The breakneck bullish economy didn't sustain unrealistic buying habits for automobiles... I'm afraid every consumer market has been affected. For those of us who had parents or grandparents around to explain what things were like while recuperating from a major depression... we probably know what to expect. This one doesn't seem quite as bad yet because we're printing bad money to throttle the effect, but certain maxims have endured through generations for a reason... there is no free lunch, and the buck stops here. Reply
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