[blackwasp]

Automakers in some of the largest car markets like the US and China have reported low growth or in some cases even declining sales. It has been reported that the demand for cars has peaked and will continue to decrease due to lack of sales incentives.

In China, the world's largest auto market, demand has fallen over the last couple of months. Due to the recent trade war with US, customers are avoiding American brands. Earlier this year, the Shanghai stock market fell by 18% and yuan has weakened as well, which suggests that China's economy could be slowing down.



In Japan, the numbers are down by 3.4 percent during the first eight months of 2018 compared to same period last year. The country's ageing population is seen as a factor as many residents are giving up driving while the young generation prefers not to own a car due to the high cost of ownership. On average existing owners are replacing their vehicles in 7.7 years, which is longer than in the past.



In USA, car makers have missed the estimates for August, while reporting negative growth in the month on July. Further, the annualised sales numbers for the whole industry have reduced to the lowest in a year.

The four largest markets in Europe - Germany, UK, France and Italy have reported nil growth in the first 6 months of the current year. Despite this, the overall numbers have been in the green for the European region.



Source: Bloomberg

Link to the Team-BHP News

[Rajeevraj]

Not a very different trend in India also. Looking at the last one years data, sales seems to be hovering around 275,000 units on an average(Image courtesy-August Sales Thread). In spite of car penetration still being extremely low compared to the other markets, the overall sales seem to be pretty stagnant. Longer retention periods, lack of interest in the current generation to buy cars, increasing traffic, in-frequent break out models I think all contribute to this.

[nakul0888]

Also Ford and GM seems to be in a pretty serious bear market. Ford shares have gone down 30% or more. So has GM's. Tesla stock valuation is a joke. They are yet to post a single year of profit despite being in the business of selling 150,000$ cars to rich people in California. In car business this is about the juiciest fattest margin giving segment there is. Maybe Elon should take business management lessons from Porsche. There is a massive sub prime loan crisis in the auto loan sector too. Too many people who cant actually afford new cars buying them on super cheap credit and now defaulting on their loans. Everyday we hear that the U.S is booming under trump and yet car sales are down, the two biggest car companies are in a bear market and the housing market is also in a slowdown. On top of all of this Trumps stupid trade wars. Its been 10 years since the last recession. I think something big maybe coming.

[Ragavsr]

The sales might be down because the car industry is at an infliction point of transitioning from petrol/diesel to electric all over the world. Lot of people are holding on existing vehicles hoping to replace them with reasonably priced electric ones.

Unfortunately, the car industry has been quite slow in bringing out new electric cars especially in India. The fuel prices here are very high considering the per capita income here.

Originally Posted by nakul0888

Also Ford and GM seems to be in a pretty serious bear market.Tesla stock valuation is a joke. They are yet to post a single year of profit despite being in the business of selling 150,000$ cars to rich people in California. In car business this is about the juiciest fattest margin giving segment there is. Maybe Elon should take business management lessons from Porsche. There is a massive sub prime loan crisis in the auto loan sector too. Too many people who cant actually afford new cars buying them on super cheap credit and now defaulting on their loans. Everyday we hear that the U.S is booming under trump and yet car sales are down, the two biggest car companies are in a bear market and the housing market is also in a slowdown. On top of all of this Trumps stupid trade wars.

You bring out a lot of great points

Ford and GM being caught up in a bear market is due to their own short sighted decisions. The Ford lineup is pretty old - the Fiesta, Focus and Mondeo/ Fusion, Escape / Kuga are all old and they want to discontinue all their bread and butter cars to focus on SUVs.

GM, after quitting Europe and other countries like India, Indonesia is pretty much a regional player like how Fiat used to be before it bought Chrysler.

[anjan_c2007]

There are many markets especially in the developed world that are saturated and the production/ sales growth rates for car makers are too low in these countries. They have tried all tricks in their bags and are unable to do much in these markets due to limitations.

India promised them a very high growth rate on a year on year (YoY) basis and some of the international brands that ventured here relished the fruits of success. This is though not applicable to car makers like Mitsubishi, Nissan (only marginally successful), Skoda, Fiat (the brand Jeep has changed their fortunes though) and a few others who are struggling. GM with its Opel and Chevrolet were the casualties.

The potential for India to reach the # 3 slot from # 5 ( #5 as per 2017 statistics ) position in the list of Top 10 countries by car production is quite possible in the next five years. China (29.015 million units), U.S.A. (11.189 million units), Japan (9.693 million units) and Germany ( 5.645 million units) were ahead of India (4.782 million units) in the 2017 list of countries with the maximum car production. The U.K. is at # 15 with 1,749,385 units produced in 2017, while in 2016 it produced 1,816,622 units - a negative growth. South Korea, Mexico, Spain, Brazil and France trail India at # 6 to # 10 positions, in the 2017 Top 10 list.

China, the largest car market now, is in a state of uncertainity, due to the imposition of import duties by the U.S., a major market for China's goods' exports and for its domestic earnings.

China and India were the only to high growth markets for car makers in their lexicon. Lately, things seem to have become worrisome for car makers. In India, the high oil prices, rising US dollar vis a vis the Rupee (resulting in costly imports for car makers) and the current account deficit (CAD) may all play spoilsport for car production and sales numbers.

It is under such spells of uncertainity that the car makers' lobby negotiates with the government to devise policies to limit age of cars, scrap older cars, offer incentives to new car buyers and so on, all to boost their sales. These steps are quite retrograde for old car owners, who would otherwise like to retain their older cars much longer, maybe due to compulsions or several other factors. The Indian politicians and bureaucrats with basic minimum knowledge of automobile engines, unilaterally say that the older cars cause pollution and need to be scrapped. Delhi despite all the old cars getting scrapped due to the NGT ruling, faced one of the worst smogs in its history during the winter of 2018. The fact that old cars pollute is baseless, untrue and has malafide intentions. It needs to be challenged outright, as an older car if well maintained can be very less polluting, even as compared to an ill maintained BS IV car or another BS IV car whose ECU is malfunctioning.

[landcruiser123]

The main reason for slowing of car sales is transformation of the economy- 'sharing' rather than 'owning.' In many metro cities in the US, it is not uncommon for young people under 30, to not own a car or own 1 car for a family. Zipcars, Uber and Lyft have made it very convenient to get personal mobility for the amount you want to use.

With self-driving cars at least 10 years away, I think this will further kill the industry.

Other factors:
1. Good quality of cars- Why replace something that isn't broken?
2. Banning (or proposals to ban) of cars from city centers (Western Europe)
3. Changing environmental regulations

Car sales will still keep rising in India/Africa.

[SmartCat]

I wonder if it is a sign of an upcoming global recession. We had a worldwide fall in car sales in 2008-09.



Car sales data is an excellent indicator of global and local economic health.

[greenhorn]

when we say car sales, are we talking strictly about sedans and hatchbacks? or all passenger vehicles? sedans and hatchbacks have been on a downward trend for a very long time with them being replaced with SUV's
It's so bad that Ford just quit selling cars other than mustangs in the US

I would be more curious to know the overall passenger vehicle trend

[aniyo]

Sales will still be on growth in India for some time.

It could have been better if not for the ridiculous taxes on all counts, Income tax, Excise duty on cars and petrol.

I am all for high taxes on cars and petrol if we have an alternate option like electric cars or a robust public transport.

In all metros the public transport is horriblly behind the demand. Politicians love building flyover which just moves traffic from one junction to other without solving the problem.
I would restrict my car usage by half if I get access to good public transport system.

I had read an article last year about how major car companies in USA bought the mass transport system and shut it down so people will buy more cars. This was in early 1920's.
I bet in India it is pretty much the same. Large car companies do not allow the public transport to flourish. There is absolutely no other reason that governments have not invested in a good public transport and there is money to be made here even for the politicians.

[GTO]

For the auto industry (and us car enthusiasts ), it's a worrying trend at the global level. App-based taxis, easy rentals like Zoom Car and car sharing are rapidly changing the landscape. What's worse, in the West, young people are lesser inclined than ever to drive or own a car. In the USA, applications for new driving licences from teenagers are at their lowest level in history. The kids of today would rather spend money on gadgets / clothes / experiences than cars.

In India thankfully, I see the car market only growing. Reasons = Poor public transportation. As you move out of the cities, it's more like no public transportation. Also, that first car is a 'must have' socially (once you can afford the same). Lastly, our car penetration levels are damn low and there is a lot of room for growth. Think 30 - 40 cars / 1000 citizens compared to 800 cars / 1000 citizens in some developed countries.

Before, there was a famous saying that Indians only wanted 'roti, kapda aur makaan' (food, clothes & a house). Now, it's roti, kapda, makaan aur gaadi' (car).

Originally Posted by smartcat

I wonder if it is a sign of an upcoming global recession. We had a worldwide fall in car sales in 2008-09.

I recently read an article where JP Morgan warns of an impending financial crisis in 2020.

Originally Posted by greenhorn

when we say car sales, are we talking strictly about sedans and hatchbacks? or all passenger vehicles?

All passenger vehicles.

[devarshi84]

When GM, FORD and Chrysler provided turnaround plans post 2008 crisis, all of them had Electric cars and high Fuel Efficiency vehicles written on all the pages.

10 years later, all three are focusing on high margin Heavy weights Only and sedans and hatches have disappeared.

On the EV front, None of the major car makers have a juicy EV coming up for sale. Additionally, for a sole EV maker like Tesla, Elon Must is in the news for all the wrong reasons. It is almost a rerun of ' Who killed the electric car?'.

Reasons? The US is still fighting its war for oil as they are invested extremely deep. The Iran crisis has less to do with Nuclear and more to do with oil and the US currency used to deal in oil.

Obviously with so much uncertainity in the world right now (bank scams, GST and demonetization in India, Crude price rise globally, Refugee crisis in Europe, US-China trade war and general uncertainity of returns in the market), People are shying away from big ticket investments like cars and SUV's in general and money is being parked in debt savings.

If US stays relevant to the world leadership in the years to come, carmakers will bounce back big time. But China is also a major economy now and second only to Norway in the big EV push.

The picture of the immediate years to come is clearly unclear. It is but obvious that the winners are car rental and sharing services and those in the business of public transport.

[navin]

Originally Posted by GTO

App-based taxis, easy rentals like Zoom Car and car sharing are rapidly changing the landscape.

Based on my own personal experience, I agree. In the big 3-5 Indian metros, much like the US, teenage boys (and I say boys because as a group they show a greater interest in automobiles than girls) are not pestering their parents to teach them to drive or even get a driver's license as we did in the 80s.

They are quite comfortable with Uber/OLA/taxis and on occasion manage to car pool using one or the other's parent's chauffeurs.

I once thought I would teach my son to drive, like my father did but at 16 he still shows no interest in learning to do so. Eventually I might have to force the skill on him as an "essential survival" skill.

[ajmat]

I had to force my daughter to get a licence and drive. Their logic is that Uber etc are around, why do I need to drive, I can do other stuff on the move.

[shipnil]

Originally Posted by navin

I once thought I would teach my son to drive, like my father did but at 16 he still shows no interest in learning to do so.

Originally Posted by ajmat

I had to force my daughter to get a licence and drive. Their logic is that Uber etc are around, why do I need to drive, I can do other stuff on the move.

Tell me guys, doesn't it bother your respective kids the waiting times for rides to arrive or surge prices that are more common nowadays than normal or city tours that you take if you take pool? Or is it that they are not bothered since the funding still comes from parents and may be once they step out and be on their own, at that time they might weigh the pros and cons of cabs against owning a car?

I had tried to use the cabs for few days when there was the price war in early days. It made sense back then. But now with higher prices, I don't like to use them for daily commutes.

[navin]

Originally Posted by shipnil

Tell me guys, doesn't it bother your respective kids the waiting times for rides to arrive or surge prices that are more common nowadays than normal or city tours that you take if you take pool?

Not really. The kids are smarter than us.

They car pool even with Uber/OLA
They factor in cost of parking (typically Rs. 100 for 3 hrs, more if longer)
They factor in the time and trouble taken to find parking.
The person driving has to focus on the road and traffic instead of partaking in the fun they have in the car.

Example:
So if 4 kids are going to the mall the Uber bill (both ways would be around Rs. 200-250). If they are pooling in costs it will cost Rs. 50-60 per kid. After deducting parking, fuel, maintenance, etc. it probably works out to the same cost. Uber has no trouble, time lost, etc.

Now look at my own case. An Uber from my office to home is about Rs. 100-120 each way. Say Rs. 250 both ways. My driver's CTC is at least Rs. 20,000 maybe more but to be safe lets assume 20,000. This works out to more than Rs. 750 per day. The fuel is mine, all the maintenance is mine and I have a garage at both ends (for those who don't, you have to add parking charges). If I took an Uber both ways to work I would save Rs. 13,500 per month at the least. Over Rs. 1.5L per year. And no EMI for a car either.

Who is smarter? My kid or me? Even if you factor in the occasional surge prices.