Is the Global Auto Industry on the Brink of a Boom?
With the global economy in a slump, there are many industries that are suffering. You do not have to look very far to find news about spending cuts, job loss, and shrinking sales within many sectors. One industry that has managed to escape the blunt of these issues is the automotive industry. A recent report found that auto sales in the United States were the highest in four years, many other countries around the world are experiencing success. Many experts are beginning to ask: is this the beginning of the next big boom for the global auto industry?
The report found that there was an increase of 13% in U.S. car sales as compared to a year ago. This is a great sign for the world’s largest economy; a continued rebound from the government auto bailouts of 2008. Analysts believe that the robust pace was fueled by consumers replacing older vehicles with newer, more fuel-efficient models. The average age of a U.S. car is 11 years old, causing many drivers to purchase new vehicles. U.S. sales are growing at a very fast pace, but transport manufacturing in the nation is not as fruitful.
The boom in auto manufacturing is being led by Japanese and German firms, with U.S. firms having weaker results. Japanese firms such as Toyota and Honda are experiencing major gains as they ramp up manufacturing back to levels last seen before the 2011 Tohoku earthquake and subsequent tsunami. U.S. firms that typically produce heavy-duty vehicles such as SUV’s and trucks are seeing demand remain stagnant and sales stay flat due to worries over oil price inflation. Global sales as a whole are up 8% year-over-year with sales in China up 11% year-over-year and Brazilian sales scheduled to post double-digit increases as well. With double-digit growth like this, we could be witnessing the beginning of a very prosperous cycle for the auto industry.
Not all economies are sharing in the success. The euro-zone sovereign debt crisis is dragging down economic growth in the region, causing car sales in Western Europe to deteriorate. Many auto makers in the region are being forced to cut costs and decrease production. Auto sales in the EU are likely to fall to their lowest level since region-wide data was first collected in 1990, a direct impact of the slowing economy in the area. As a whole, the worldwide automotive industry seems primed to be at the forefront of economic growth, with many positive outlooks throughout the world.