This article was originally published by Tyler Durden at ZeroHedge.
Automakers can’t help but acknowledge the global recession in their industry after a decade of growth. As a result, they are slashing payroll across the board, according to Bloomberg. Countries like China, the United Kingdom, Germany, Canada, and the United States have all seen at least 38,000 job cuts over the last six months in the automotive sector. And this could just be the beginning of larger cuts to come.
Daimler CEO Dieter Zetsche said Wednesday that “sweeping cost reductions” are ahead to prepare for what he is calling “unprecedented” industry disruption.
Bank of America Merrill Lynch analyst John Murphy said: “The industry is right now staring down the barrel of what we think is going to be a significant downturn. The pace of decline in China is a real surprise.”
Automakers are cutting shifts and closing factories across the world but the cost-cutting goes beyond that. Salaried workers are also being cut, a surefire sign that slowing sales in both China and the US are taking their toll. Additionally, the slow down is coming at a time when automakers have deployed significant capital to invest in electric vehicles.
We reported about Ford’s plans on Monday to cut another 7000 jobs, representing 10% of its workforce worldwide. And the recession, which was likely due to happen regardless of market conditions, comes at the worst possible time. It could be exacerbated by the ongoing trade war, which foreign carmakers have warned could put 700,000 American jobs at risk.
This chart shows all of the job reductions announced and reported over the last six months.
Morgan Stanley analyst Adam Jonas said Tuesday: “Auto companies globally are contemplating life where global production has greater downside risk than upside. The chopping may not be over for Ford,” he continued, estimating a 5% decline in revenue could result in 23,000 more layoffs in the future.
Meanwhile, global light vehicle sales were down 0.5% in 2018 to 94.8 million, which was the first annual drop in global sales since 2009. Zetsche concluded: “Everything is under scrutiny.”
Sorry, Chicken Little, but this is merely supply & demand…
Auto makers churn ’em out like they’re disposable and everyone is buying a new car like they buy a latte. Then they wonder what happened?
$50-$70 thousand dollar lattes? Sorry, they have priced themselves out of the market. 7 and 8 year loans. Drive it off the lot and see what it is worth! Gap insurance. Unrealistic leases, thousands down, $600 and $700 a month lease payment, and
you give it back after 3 years, and also have to pay to fix it up for them. Government regulations also drive up the price, like backup cameras on every vehicle.
Why is this a surprise? My wife and I were in recently looking for a car and the cost of new was, OMG, high. How many folks can actually afford a new car? I wanted a Pickup for my bike shop and I could not afford what was on any of the stickers. will stay with car and trailer…
I see a future in automotive repair.
I see a future in funeral homes.
Might be a future in Toyota. They weren’t on this list. I love my new Tacoma.
yep. time to buy AutoZone stock ?
The US auto fleet will look like Cuba someday. Cars from the 2010’s still in service in the 2070’s.
The future is providing for the 300 million morbidly obese Americans in 2050. WALL-E
Today is May 27th, Memorial Day. In memory of my best friend, Mike Waterloo, killed in action June 24, 1969, Republic of Viet Nam. Mike was stationed at Cu Chi, with 2nd platoon, C Company, 2/27th, 25th Infantry Division. Got blown up by a land mine. It was an anti-tank mine. He got vaporized. They didn’t have anything to put in the coffin except his dog tags. We lost a good guy.
Rest in Peace.
I see a future in Uber,public transportation.motorcycles and bicycles.
We have working people making $15.00 an hour but can’t buy a new $30-40,000 car. The cost has overtaken wages. People are putting high mileage on the ones they have and putting money into repairs instead of monthly payments. Food and rent come first. Him; I salute your friend and you too for your service!
Jim in VA, I’ve ALWAYS bought something with high miles on it. Some were on ‘life support’ LOL so I’d give it a NEW LEASE ON LIFE. I put money into repairs since I don’t make enough money to even WORRY about any stinkin’ credit. I do CASH ONLY. CASH STILL TALKS. I’ve never gone broke to pay for an overpriced car and never will. The basic necessities always come first.
Its the prices. When vehicles cost more than some homes. Folks cannot pay them off in a few years and go buy another new car. Wages have not kept up with inflation. and vehicles have skyrocketed in price.
A new Chevy or Ford truck can easily cost $60k – they’ve prices themselves out of the market.
Car makers are just too stupid to make an affordable car. If they would shitcan all the BS electronic crap and just make a bare bones analog vehicle it would sell. Why would anyone pay out the wazoo for all this BS you don’t want or need? Just more things to break down and cost you money. Think Folkswagon….
Apparently they think the more electronic shit they put in a car the more you will want it. The exact opposite is true. Take all your gizmos and shove it, I will never buy a new car.
Happy Memorial Day to everyone. I just got back from GA yesterday [SIGH, HATED TO COME HOME]. Genius, damn good points I’m looking at a couple of mid-90s GMC Sierras this week and may be driving home the best of the two. Still plenty of those on the road not much electronics, and parts still easily available for them. I agree that if the carmakers went back to the old technology they’d be surprised how well that would sell. give me that ‘bare bones analog’ and I’m a happy camper.
Genius, I’m going to look at a couple of mid-90s GMC Sierras this week and possibly driving home one of them. Give me analog any day also. Just got back from GA yesterday; GRRRRR it sucks I had to come home. Car makers really ARE too stupid to make an affordable car from the OLD technology. But even if they did, how many people would be smart enough to buy them? People like us would but the SHEEPLE? Don’t count on it. They love their gizmos and gadgets so much that if they lost those it would be the end of the world for them.
Agree, everytime someone shows me the “new” features, I think of my dad: “just one more thing to go wrong.”
“In The Wonderful Wizard of Oz, the Tin Woodsman’s origin story was that he was an ordinary flesh-and-blood man named Nick Chopper who gradually lost all his limbs, his torso, and finally his head, having each replaced by tin. The question of whether or not he remains the same person is brought up in a humorous fashion through the rest of the Oz series, culminating in the Tin Woodsman meeting a version of himself created from his flesh parts, with the two debating which of them is the “real” Nick Chopper.”
“The ship wherein Theseus and the youth of Athens returned from Crete had thirty oars, and was preserved by the Athenians down even to the time of Demetrius Phalereus, for they took away the old planks as they decayed, putting in new and stronger timber in their places, insomuch that this ship became a standing example among the philosophers, for the logical question of things that grow; one side holding that the ship remained the same, and the other contending that it was not the same.
— Plutarch, Theseus
What if you source just one car part, or make just one useful thing, independently.
You can see — with a mathematical certainty — that someone should never have been trusted with authority, yet were asking yourself whether that was a seditious thing to say, self-censoring, and memory-holing that thought.
Acreages of unsold cars, with prices that never saw a free market. You can wrap your mind around this proof of a fake shortage.
Since I’ve been old enough to buy cars I’ve seen buyers finance them for 2 years, then 3, then 4, now 5 and 6 years, even 7 years. This is for two reasons; a)vehicles are really way too expensive, and most people simply don’t have the disposable funds for large purchases like they use to, and, b)a lot of buyers are unrealistic today, they want new-car gratification regardless of cost, dealerships know that. Since many cannot afford large monthly new car payments without stretching them out (due mainly to wages falling measured against ongoing inflation) they don’t ask what the total price is, rather, they ask what the monthly payments are. The dealerships are happy to finance for longer periods of time to “accommodate” the buyer’s wish for a slightly lower monthly payment, but most buyers actually end up paying even more in the long run.
Additionally, many buyers neglect to consider the never-ending expenses of property taxes, insurance, and upkeep that vehicles require. They also are unaware about halfway through the car loan they may still owe more on the vehicle than what it’s worth due to huge vehicle depreciation.
Most buyers who finance don’t stop to realize there are two different entities making a profit from the buyer from only one vehicle purchase, the dealership, and the finance company. I paid off my pickup in a year and a half, and wrote a check for the full amount of my car even though the dealership tried to convince me to finance it. I don’t buy brand new vehicles anymore, rather I buy when it is about a year old, I let someone else eat the 25 % first year depreciation. I can do this because I take care of my vehicles and drive them for years, while gradually saving money in the meantime for the eventual next vehicle purchase, car loans suck!
The only way to effectively lower the cost of something is to boycott it, boycott it hard. Americans are too undisciplined to do that, and have been inculcated to be little more than mindless consumers.
If enough people would just say no and forgo or delay their gratification they would see the price of everything drop. Cars, gasoline, real estate, everything. Wealth is power, and the power of the middle class is shrinking due to diminishing wages. But the one thing we still have is numbers, but that is nullified because the gov’t, MSM, “civil rights” organizations, NGOs, and many other special interest groups, which are united ideologically, want keep society fractured, the old divide and conquer. We are not united enough to pose a sufficient counter force for what we want for us and the country.
Gov’t hates boycotts as much as business, if something is not bought there is no tax collected from the purchase. And gov’t and corporations are in bed together for mutual benefit – gov’t gets tax money, politicians get lobby money, “campaign donations”, and other funds, while corporations can get lower tax rates, basically do what they want, and have favorable regulations passed for them.
Other than their trucks Chrysler is and always has been a piece of shit anyway.
The major problem holding back freedom, equality and most importantly justice is the ongoing never ending war machine that protects the criminals at the top. Recently read an article listing all of the downed US aircraft during the Vietnam war, it was an enormous loss of life and billions of dollars of war machines of all kinds. These continuing actions keep the American people as slaves to tyranny. The cash from the defense contracts are then fed back to politicians to keep the corruption going nonstop. At all levels the antiwar sanity is blocked.
What’s behind door number three ?
A NEW CAR !!!!