When times are good, automakers spoil us. When times are bad...well, let's not talk about it.
The economy is a pretty tough thing to understand and even those that spend years in school and decades in a career analyzing trends can be caught off guard by sudden turns in the market. However, the principal of “what goes up must come down” is one that holds true for Wall Street and it appears to be playing out according to plan in the auto industry. As Reuters has pointed out, after this recent period of strong growth, things seem to be cooling off a bit and as far as we know, this could have no impact on automakers or bring on an onslaught of change.
Fueled by the post-recession recovery and low gas prices, the last couple of years have seen sales records broken and appetites for large SUVs reinstated. Now, as turn of the month sales numbers from August roll in, it appears that auto sales have dipped by as much as 4.2 percent in the US. Those to blame for the dip are the larger automakers like Ford, GM, and Toyota, all of which saw sales decline by more than 5%. FCA on the other hand, is one of the only large automakers to report a sales gain, although as we’ve recently reported, some FCA sales may be invalid since the company lied about its numbers. As gloomy as it sounds to hear that things are on the decline for the auto industry, it may not be a bad thing.
Periods of growth can only last so long before they even out to levels reflective of the economy as a whole. In the short term, this may be a good thing for us gearheads as automakers jack up the incentives to get more cars off the lot. If this downward trend continues, we can expect to see sticker prices on some of our favorite cars slashed. On the other hand, if it keeps falling, we could see plans for some low-volume cars, usually the faster variety that we tend to like, thrown to the trash bin to make room for the practical high-volume models. In all likelihood, the auto market will probably slow a bit further before evening out, meaning we should get the best of both worlds (temporary sales incentives and supercars). Gotta love the economy.