The outlook for the auto industry is diminished somewhat with the unemployment rate in the US and the decision by the Chinese government to slow down its economy. What goes on in the US and China are significant as they are the world’s two largest car markets.
In August, US auto sales were the worst for the month in 28 years. On the other hand, China’s passenger-car deliveries to dealerships rose at its slowest pace since March 2009. Sales dropped when governments ended the stimulus measures that boosted sales in the US, China, Europe and Japan.
This bleak outlook for sales is expected to adversely affect profitability since carmakers, including Toyota Motor Corp., General Motors Co. and Volkswagen AG, would be compelled to offer higher incentives to attract customers.
Yuuki Sakurai, CEO of Fukoku Capital Management Inc. in Tokyo, said that the US economy is “looking downward” especially with indicators like high unemployment and mounting bankruptcies.
The Japan-based dealers of Toyota have began offering incentives for the Prius hybrid even before government subsidies of up to 250,000 yen ($3,000) were terminated on Sept. 8.
Last month, Christian Klinger, sales chief at VW, described the operating environment to be more difficult. In an e-mailed statement on Aug. 13, Klinger said that with the end of incentive programs, the global automotive market will decline in the second half. [via autonews - sub. required]