The Strategist

The US car market collapses for the first time after the 2008 crisis

01/10/2018 - 14:34

Sales of new cars, one of the most important indicators of the economy, collapsed in the US following the results of 2017 for the first time after the world crisis of 2008. In the new year, the fall will continue.

During the financial crisis of 2007-2009, the demand for new cars has fallen to the lowest levels in decades, and US authorities have sent billions of dollars from the US budget to save the leaders of the American auto industry.

In 2017, sales in the US fell by 2% to 17.5 million cars, but stayed above 17 million for the third consecutive year.

At the same time, the production and export of cars in Mexico have grown according to the Automobile Manufacturers Association of Mexico (AMIA).

In Mexico, where US auto giant plants operate, 3.8 million cars (+ 9%) were assembled and 3.1 million (+12.1) were exported.

Most of the machines were delivered in the US (2.3 million).

The decline in sales in the US began in January 2017, and by April, a million new cars were covered in dust at US auto manufacturers' warehouses.

By May, the number of new cars in warehouses has increased to the level of the crisis year of 2009, newspapers reported earlier.

So, according to the results of January-April, 936 thousand cars stood idle in US warehouses. This number of cars, dusting in warehouses or dealer stands, was not observed in 9.5 years, that is, since November 2007.

The demand for cars is declining both from ordinary American consumers and from companies that rent cars.

In 2018, the drop in sales may continue. The Fed will raise the rate, and buying car loans will not be as attractive as before.

Prior to this, sales of cars in the US have been growing steadily for seven years. The boom in the US auto industry since 2010 has been the main driver for job creation.

Now, Wall Street worries that the US automotive industry is moving steadily toward a recession. For thousands of workers at the factories of General Motors in the United States, hard times have already come. In January, a year earlier, GM canceled the third shift at its plant in Lordstown. Then, 1,200 workers lost their jobs. The layoffs continue.