The more you dive into the auto industry, the more fascinating it becomes. As I'm looking into a story on the economic impact of the car industry's problems, one fact really stunned me: Last year, nearly 30 percent of California's new-car purchases were made with dollars generated by home equity loans. That was three times the US average.
The source is CNW Marketing Research, an Oregon car-industry analysis group.
This year, predictably, home equity is drying up as the fuel for purchases. Only 16 percent of new vehicles are being bought in California with home-equity cash.
Meanwhile, the Big 3 today are still pleading their case to Congress for a bailout. There's also a remarkable op-ed column by former GOP presidential candidate Mitt Romney in the NY Times arguing that it's best to let the automakers file for bankruptcy (You'll recall that Romney's father ran American Motors before becoming governor of Michigan).
An Elk Grove car dealer tells me the biggest problem with bankruptcy is that vehicle sales would vanish because customers would fear that manufacturers' warranties would become worthless. Romney says that can be remedied by having the government stand behind the warranties.
And on it goes...