Compared to the previous year, U.S. auto sales plummeted more than 18 percent last month, falling to numbers that indicate the worst sales in more than a decade. In fact, these subdued sales could even mark a 15-year low. According to one FreePress report, “June sales were off from a year ago by a breathtaking 35.9% at Chrysler LLC, 27.8% at Ford Motor Co., 21.4% at Toyota Motor Corp. and 17.7% at Nissan Motor Co.”
General Motors, on the other hand, performed much better than expected with a mere 18.3 percent decline. But how long can they continue the zero-interest, long-term financing deals that allowed this accomplishment? The economy isn’t faring well, and it’s harder for companies to meet certain demands from consumers. As more people demand smaller, fuel-efficient cars with lightweight metals like aluminum and magnesium, companies have to slash production of their larger SUVs and pick-up trucks — the same vehicles that provide pocket money for most of the Detroit automakers.
“If auto sales don’t improve, the industry would sell just 14.8 million cars and trucks in the United States this year,” FreePress shares. “That is about 2 million fewer vehicles than automakers have grown accustomed to selling in recent years.”
Can companies weather this downturn? Sure, it’s more than possible in the long term. But with $4-a-gallon gas, the immediate future has a different outlook until supply can catch up with demand for fuel-efficient vehicles. We also wonder if consumer demand will lead to more aluminum and magnesium substitutions for iron and steel. More likely than not, sales won’t increase until these “lightweight” demands are met.