As the yearly forecast for new car sales in the US is downsized to below 16 million, it is clear that the industry is facing a slowdown. This is the result of several factors, including overseas competition and a strong euro. US makers may have to cut back on production to avoid mounting stockpiles of new cars.
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US car industry sales forecasts for this year have been reduced from last month’s optimistic estimates of 16.5 million sales, to below 16 million. This volume, while equivalent to last year’s sales total, demonstrates stagnation in growth for the sector.
In the face of this slowdown, which is now more apparent than ever before, the big three US manufacturers have been waging an increasingly fierce price war, with ever increasing purchase incentives on their new vehicles. These incentives have included drastic measures for their leasing and hire-purchase offerings, which are unprecedented in this, the world’s foremost car market.
However, despite such tactics, vehicle manufacturers are still feeling the pinch. Ford has suffered mounting losses and DaimlerChrysler has seen its market share reduced to 13%. Even GM has suffered recently in its attempts to fend off the increasing competition from overseas players such as Toyota, which are vigorously gaining market share in the face of the traditional domestic leaders.
In addition to these woes, a strong euro is harming the European divisions of American manufacturers by increasing production costs in the region. At the other end of the market, used vehicle residual prices have been falling and consequentially reducing the revenue stream available from ex-fleet market vehicles.
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By GlobalDataAs the situation deteriorates, manufacturers are increasingly experiencing inventory problems as they are unable to shift their growing stockpile of cars into the saturated fleet market. With the increasing costs of product storage and reduced retail revenues, coupled with relaxed consumer demand, production cuts look likely to occur across the industry. With these drastic measures will come proof, if such were needed, that times becoming ever harder for the US car industry.
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