Auto Industry Braces For Downturn as Sales Growth Slows

[ndavies]

Isn't there a joke that economics is the 'dismal science'?

We have one article predicting a slow down and another predicting an all time high [[in auto sales) which together simply tells me nothing. x 4

The articles are talking about 2 different regions. the NY times article is talking about stock price which is tied to world wide sales. The Freep article is about them selling 17 Million vehicles in the US. The US sales are great, the slow down is in the rest of the world.

And of course US sales growth will slow. They're selling more cars than have ever been sold in the US in one year. The entire car distribution system is taxed to it's max in the US. While it may go up a little from here, It's more likely to go down due to the cyclical car market.

Even if car sales fall to the previous levels, it won't be as bad as the last decline. The companies have greatly cut fixed costs and can still be profitable with lower sales volume.

[erikd]

The articles are talking about 2 different regions. the NY times article is talking about stock price which is tied to world wide sales. The Freep article is about them selling 17 Million vehicles in the US. The US sales are great, the slow down is in the rest of the world.

And of course US sales growth will slow. They're selling more cars than have ever been sold in the US in one year. The entire car distribution system is taxed to it's max in the US. While it may go up a little from here, It's more likely to go down due to the cyclical car market.

Even if car sales fall to the previous levels, it won't be as bad as the last decline. The companies have greatly cut fixed costs and can still be profitable with lower sales volume.

Ndavies is absolutely correct.

In addition to his analysis, it is also important to understand that the Great Recession was the worst economic event in America since the Great Depression, and is not representative of the normal economic downturns that are part of the regular economic cycle.

There is a huge difference between a normal cyclical recession that reduces annual auto sales from 16 million to 15 million, and an economic crisis that reduces sales from 16 million to 10 million.