The US auto industry experienced the longest sales decline in terms of time period, and low consumer confidence is dampening the prospects of improvement in coming months too.
According to the automotive research firm, Edmunds.com, the US auto industry witnessed sales decline for the 12th month in a row during October 2008, the longest sales decline in terms of time period in last 17 years (since 1991), as reported by Bloomberg.
The automakers in the US are struggling to prevent their shrinking pools of cash and fighting for their survival. Moreover, the sales are expected to decline up to 40% as the overall market is slumping to the lowest level last seen in the 1980s when the US population was 60 Million lesser than what it is today. In addition, the light vehicle sales were estimated to be around 11-11.3 Million in October 2008, down from 16.04 Million in October 2007 and 12.5 Million in September 2008.
The fall in sales of the US auto industry is accredited to low consumer confidence that is affected by plunging stocks. According to the Conference Board, this fall is the lowest in the last four decades, and low consumer confidence is dampening expectations of recovery next year as well. Moreover, the weak economic growth has played a key role in low automobile sales in the US.
Besides, the current liquidity crisis in the credit market has worsened the situation by increasing pressure on the auto industry. Customers are finding it extremely hard to get loans for buying vehicles as banks have tightened their lending policies due to widespread mortgage defaults which completely disrupted the financial markets.
Industry experts believe that the month of November from sales point of view is one of the worst months, while December is generally one of the best. They reveal that if the auto sales in December 2008 remain immune to the impact of election and other variables, then the total volume sales will reach nearly 13.6 Million units.
According to a Research Analyst at RNCOS, “Automobile sales in the US are badly hit by low consumer confidence and credit crisis, resulting in huge loss to car manufacturers and dealers. The sales may jump with the improvement in credit conditions and regaining of consumer confidence.”
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