U.S. New Car Market Hits the Buffers, Big Style

by John Horner

May 20th, 2008 11:15 PM

u s new car market hits the buffers big style

The harsh realities of a mature US automotive market are wrecking havoc on the plans and finances of all the players. The Wall Street Journal reports that 15 million units is about the best the industry can hope for in '08. That's back to the future, 1990s style. Even market share-gobbling Toyota senior executives admitted they have "about a full plant's worth of excess capacity in North America– not including the Tupelo plant due to open in 2010." Holy excess capital expenditures Batman! The master of production planning has hit the wall. Bottom line: the US is a stagnant, mature market where new cars are competing for replacement business, not growth. Meanwhile, more manufacturers are threatening to enter the US market. The Chinese and Indians (Tata) are chomping at the bit, and Alfa-Romeo has announced plans to return… soon. Analysts forecast a return to growth in the decade ahead. Still, clearly, not everyone's going to make it.

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4 of 17 comments

David C. Holzman on May 21, 2008
# Gottleib : If we open the borders then we will increase the number of people that need to buy a car. Think about it that’s what happened at the beginning of the last century. Our borders are open for all practical purposes, and have been for the last 40 years. In 1990, the population increased by the equivalent of four New Jerseys, three of them do to mass immigration. All this cheap third world labor is keeping US workers down. The US National Academy of Sciences found in 1997 that from 1979-1995, the wages of US high school dropouts plummeted nearly 30%, more than half of which was due to competition from immigrants. According to the Pew Research Center, the US population will explode from the current 303 million to 438 million by 2050, and more than four fifths of that growth (82% to be exact) will be due to mass immigration. With that kind of growth, the traffic is going to become like in Japan in a lot of the US.

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JK43123 on May 21, 2008

David Holzman: thank you for beating me to saying it. Also, how many new cars can cheap Third World labor buy anyway? John

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Matthew Danda on May 21, 2008

windswords: Sorry to tempt you with such a hot topic. Let's limit this to the car business--my point is that less people will be able to afford the more expensive cars because the job environment is changing. Yes, people are still employed, and yes they are healthy and affluent. But the fact of the matter is is that less people will be affluent enough to drop $40k every 4 years on a vehicle, due to changes in the structure of the job market.

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Limmin on May 21, 2008

So what's the big deal? Should people buy new cars every 3 years? Is that responsible? People are hanging on to their cars and saving their money. That's a good thing. Rampant consumerism is a bad thing.

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