Tuesday, June 18, 2019
Home Business Trump Triggers Weak Sales Plunge Auto Industry into Crisis Mode

Trump Triggers Weak Sales Plunge Auto Industry into Crisis Mode

The auto industry is facing a profound crisis worldwide, according to a study. The reason for this is the decline in sales in almost all important markets, writes the CAR Institute of the University of Duisburg-Essen in its most recent analysis of sales figures up to and including May.

After that, global sales of new cars could drop by more than 5 percent to 79.5 million units in the current year – such a sharp slump had not even been observed after the 2008 financial crisis.

Study leader Ferdinand Dudenhöffer called the customs wars and sanctions triggered by US President Donald Trump as the main reason for the crisis. The biggest concern is the Chinese market, where sales figures have been lower than in the same period last year for twelve months.

The study anticipates a decline of around 10 percent for the full year 2019 in China, the world's largest car market. In Western Europe, the minus would be more moderate at 3 percent.

Last year, the Chinese market, with 23.3 million vehicles, accounted for 28 percent of global production. More than ten years of uninterrupted growth has spurred heavy investment by China-based manufacturers and has led to significant overcapacity, which Dudenhöffer estimates to be at least 6 million vehicles annually. Of the current developments, first of all the US manufacturers General Motors, Ford and Tesla are particularly affected.

The auto industry will be deprived by the politically-economically triggered crisis significantly yield and liquidity, said Dudenhöffer. The industry therefore switch to a crisis mode. The political requirements for switching to electric cars increase the pressure on companies.

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