WEBVTT - Alan Baum Forecasts 2016 Auto Sales: Flat to Last Year (Audio)

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<v Speaker 1>Good afternoon, Katherine. Modest gains for US stocks today, with

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<v Speaker 1>scone Bill Maloney, Katherine, thank you, Bill and to hear

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<v Speaker 1>And in a breaking story, a group of as money

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<v Speaker 1>four warners in a diplomatic zone of the Bangladeshi capital

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<v Speaker 1>believed to be the hostages. We'll have more details as

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<v Speaker 1>they become available. And that's a Bloomberg Business flash. This

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<v Speaker 1>is taking Stock with Kathleen Hayes and Prim Fox on

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<v Speaker 1>Bloomberg Radio. A mixed bag for US auto sales last

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<v Speaker 1>month raises the question more than ever after a very

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<v Speaker 1>hot year last year, have sales peaked in the United States.

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<v Speaker 1>General Motors, Toyota, Chrysler, Honda, all saying Friday that their

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<v Speaker 1>sales in June trailed analyst estimates, although Nissan and Ford

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<v Speaker 1>Motor beat projections. In fact, Nissan saw their sales pop

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<v Speaker 1>some thirteen percent to a June record. He's about to

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<v Speaker 1>tell us where the auto industry is, where it's heading next,

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<v Speaker 1>about a big drop in b W sales and some

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<v Speaker 1>is from Tesla that has people wondering about the future

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<v Speaker 1>of self driven cars. Alan Baum, principle at Baum and Associates.

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<v Speaker 1>He's joining us from the heart of the auto industry

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<v Speaker 1>in West Bloomfield, Michigan. Alan, good afternoon, and good afternoon

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<v Speaker 1>to you. So what do you know what can you

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<v Speaker 1>say from this report about the strength of demand for

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<v Speaker 1>US cars and trucks, Well, it is, uh, it's it's good,

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<v Speaker 1>it's not great. UH. The thing to be a little

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<v Speaker 1>concerned about. You know, we're still two percent ahead of

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<v Speaker 1>last year year to date. But what kind of flies

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<v Speaker 1>under the radar is that last fall we had annual

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<v Speaker 1>sales rates um in in uh as say, in the

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<v Speaker 1>fall at eighteen million rate uh in UH in those months,

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<v Speaker 1>and obviously that's gonna be a hard nut to crack

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<v Speaker 1>this year. So the fact that we're ahead a little

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<v Speaker 1>bit so far this year does not to me suggest

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<v Speaker 1>that that's going to continue. I think we're gonna be

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<v Speaker 1>by the end of the year. We're just gonna be

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<v Speaker 1>flat with last year. Now that's not horrible. That's seventeen

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<v Speaker 1>and a half billion units, and I think we'll go

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<v Speaker 1>down from there again, not horribly U. But what we're

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<v Speaker 1>seeing is one of the things I was looking for

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<v Speaker 1>today was the pickup story. UM. As you they remember,

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<v Speaker 1>Jim has been on the wolf pack a little bit

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<v Speaker 1>with respect to the strength of their pickup versus Ford UH.

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<v Speaker 1>And they actually came out on the short end of

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<v Speaker 1>it this month. UM. And they were down, Ford was

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<v Speaker 1>up uh and so was the ram UH brand. Now

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<v Speaker 1>what I don't know, and we'll see you the next

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<v Speaker 1>few days, is how incentives flew out there? What was

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<v Speaker 1>the uh the approach that that the automakers took. But

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<v Speaker 1>clearly GM is trying to dent UH that was in

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<v Speaker 1>fact their their strategy. And though that uh Ford in

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<v Speaker 1>n f C A at least in June, it didn't work.

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<v Speaker 1>Um So you know that matters a because of course

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<v Speaker 1>with the huge profitability exactly so in terms of the

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<v Speaker 1>Big three, what how does their profitability look to you

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<v Speaker 1>this year? Good for investors or maybe not so hot? No,

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<v Speaker 1>I think they're doing quite well. Like you know, when

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<v Speaker 1>I talk about incentives, we haven't had very uh. GM

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<v Speaker 1>has been restrained in their incentives. They're reducing their their

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<v Speaker 1>fleet sales. UH So from the profitability standpoint, they're good.

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<v Speaker 1>But so is Florid because Florida has a full year

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<v Speaker 1>of availability of the F series and this fall they'll

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<v Speaker 1>have the new Super Duty, which will increase transaction prices

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<v Speaker 1>yet again for a very popular model. Um GM has

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<v Speaker 1>also continued to do well with the large utilities, which

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<v Speaker 1>of course are incredibly profitable now on the car side,

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<v Speaker 1>the only glimmer of hope really from GM is the

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<v Speaker 1>new Malibu, which is a great car and it's selling well. Uh.

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<v Speaker 1>The Cruise, on the other hand, it is not and

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<v Speaker 1>it is a it's a new car as well and

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<v Speaker 1>not doing so well. Okay, Alan, two more questions. I

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<v Speaker 1>want to get in before we have to say goodbye.

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<v Speaker 1>VW sales down twenty two per cent? Is their eighth

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<v Speaker 1>straight drop? Can they turn this around? They can turn

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<v Speaker 1>it around, but not soon. And you know the problem is,

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<v Speaker 1>even with the announcement of the settlement, it says nothing

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<v Speaker 1>about getting their existing diesel new cards back on the market.

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<v Speaker 1>So that's going to continue and uh. And the result

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<v Speaker 1>is there incentives they're huge, just to get people in

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<v Speaker 1>their show rooms. US regulators are investigating a fatal accident

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<v Speaker 1>involving a Tesla motor sedan that was driving on autopilot

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<v Speaker 1>of forty year old man killed in Ohio. The Tesla

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<v Speaker 1>didn't read the side of a big truck. What does

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<v Speaker 1>this mean for the future of auto drive self driven cars?

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<v Speaker 1>Seems to me it's only one, but you know it

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<v Speaker 1>was my husband or brother. I might think twice. And

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<v Speaker 1>if it's test foot It gets a lot of attention

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<v Speaker 1>because of course everything Tesla does gets a lot of attention.

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<v Speaker 1>That's said, uh, this is an unusual situation. They have

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<v Speaker 1>said that they are putting out data software uh, in

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<v Speaker 1>the in the self driving realm, which of course is

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<v Speaker 1>an unusual thing in cars. It's not an unusual thing

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<v Speaker 1>on your on your iPhone or on your keyboard. So

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<v Speaker 1>this is They'll get through this. Um, There'll be some

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<v Speaker 1>issues that have to be addressed. Well, Alan Baum, we

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<v Speaker 1>know you'll come back and discuss those issues with us.

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<v Speaker 1>It's a fascinating story, such an important trend in the

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<v Speaker 1>auto industry. Our sympathy to the family of the man

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<v Speaker 1>who was killed in Ohio. It was Alan Boum, principal

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<v Speaker 1>at Baum and Associates. I'm Kathleen Hayes. This is taking

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<v Speaker 1>Stock and this is Bloomberg. What's next for the stock

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