The Next American Car Recession Has Already Started

[CentralMass]

https://www.bloomberg.com/news/articles/2019-01-13/the-next-american-car-recession-has-already-started
"These should be boom times for Detroit. Unemployment is at a half-century low, gasoline is cheap and auto sales in the U.S. were near record levels last year. Yet American automakers are closing factories, cutting shifts and laying off thousands of workers. The industry is behaving like a recession has arrived.
In one segment of the market, it has."

"Detroit is in the grips of a car recession marked by the collapse of demand for traditional sedans, which accounted for half the market just six years ago. Buyers have made a mass exodus out of classic family cars and into sport utility vehicles. Familiar sedan models such as the Honda Accord and the Ford Fusion made up a record low 30 percent of U.S. sales in 2018"

[PoindexterOglethorpe]

1. Too many cars are overpriced.

I see that the average cost of a new car is $37,000, and I cannot begin to understand how the average person can afford that. Even if the median household income is a bit more than $63,000, the average new car is nearly 60% of the median household's yearly income. Which seems to me to be way too much to pay. Although, if you keep that expensive new car for some ten years, then it's more affordable. Which does seem to be the case, since the average age of a car on the road is nearly 12 years.

So maybe a lot of people are doing the sensible thing and no matter what they pay for the car in the first place, they're keeping it a long time.

[CentralMass]

2. I agree completely.

[PSPS]

3. "Unemployment is at a half-century low, gasoline is cheap"

That alone tells shows this to be an unserious article. "Unemployment is at a half-century low" means nothing if wages are also at a half-century low. "Gasoline is cheap" compared to ... what?

One reason sedan sales are low is because they're priced higher than a typical SUV, which are cheaper to build due to their exemption from many safety and fuel economy requirements.

[MichMan]

8. Sedans are not more expensive than SUV.

If that was the case, overall transaction prices would be lower than in previous years, yet they are not.


Nor are SUV exempt from safety and fuel economy regulations as you claim

[elleng]

4. JUST HEARD, Daimler's planning #### layoffs.

[CentralMass]

5. :-(

[MichMan]

9. Daimler has one plant in Alabama.

[elleng]

10. Mercedes-Benz owner Daimler to cut 10,000 jobs worldwide.

'Daimler personnel chief Wilfried Porth told journalists the number of jobs lost would be "in the five figures".

The move comes days after rival Audi said it would cut 9,500 of its 61,000 jobs in Germany for similar reasons.

Daimler said the car industry was going through "the biggest transformation in its history".

"The development towards CO2-neutral mobility requires large investments, which is why Daimler announced in the middle of November that it would launch a programme to increase competitiveness, innovation and investment strength," the firm said.

"Part of this programme is to reduce staff costs by around €1.4bn by the end of 2022 and, among other things, to reduce the number of management positions worldwide by 10%."'>>>

https://www.bbc.com/news/business-50598673

[Farmer-Rick]

6. A nation of sales clerks and part timers can not afford overpriced gas guzzlers

Before the free trade agreements and the war on workers by the GOP, the major profession was blue collar workers. Now it has been replaced by sales clerks. Do you think they pay the same?

And also the employment figures include part timers. The number of part timers has significantly increased but that is not reflected in the employment numbers. Part timers still count as an employed person.

No one is buying new cars cause the workers aren't making any money and the cars are way overpriced.

[MichMan]

7. The headline is deceiving and not only that it is nearly as year old

The focus of the article is that "car" sales have dropped and have been replaced by SUV sales, not that overall vehicle sales have plummeted.

While it is likely that overall sales will slow in 2020, at this point the numbers are still pretty good. No one in the industry was expecting that the strong sales figures would have continued as long as they have.