With the problems facing the economy, the sales of automotive vehicles has dropped by around 15% from a year ago this month, making for the worst sales in around a decade. Even the drop in gasoline prices couldn’t stop the plunging demand for trucks and SUVs, and the growth of vehicles sales for compacts and economy cars hasn’t been exceptional either.
The companies that have been hit the hardest this year are the domestic automotive manufacturers. GM and Ford have both seen some incredibly terrible sales, and the financial backbone behind both companies has deteriorated to the point of rendering them totally broke, and their future looks incredibly bleak.
The biggest problem each company faces is not just simply the nature of the economy at large, but their extreme dependence on larger, inefficient vehicles such as trucks and SUVs. These types of automobiles are not at all in demand given the growing concerns of fuel costs, and as such their value has dropped tremendously as well.
On the other hand, manufacturers of smaller, more efficient vehicles such as the import businesses have seen their sales remain steady, if not particularly great. The current environment for automotive sales is one that has fuel-efficiency at the top of consumer demand, and the cars that give this to their buyers are being snagged off lots. Still, even their demand is sluggish compared to what sales were like a year ago.
There is also a lack of credit available in the market to both auto businesses and consumers making access to auto loans much more difficult. With no access to these loans consumers have no way to pay for new autos and this is not helping auto sales.
If the domestic companies that produce vehicles change their strategies and develop new cars that incorporate the needs of the challenging economy, then they can turn around and start profiting again. However, this will involve completely restructuring their plants and facilities to incorporate the tools and technology necessary to produce more efficient vehicles, and with the way that they’re currently set up, this is a huge financial investment that they may not have in order to proceed with the effort.