Thousands of job cuts have been announced while demand for cars is dropping and debtors are defaulting on their auto loans in record levels. The failing automotive industry could propel the globe toward a worldwide recession in the coming months.
In addition to the trade war killing demand for automobiles, thousands of job cuts have been announced as manufacturers try to stay in business. According to Business Insider, Honda, Nissan, Ford, and General Motors have announced thousands of job cuts in Europe. Jaguar Land Rover has also begun cutting jobs.
https://www.shtfplan.com/conspiracy-fact-and-theory/trillion-dollar-auto-loan-bubble-also-ready-to-burst-end-result-is-going-to-be-catastrophic_09072016
The entire world is “cooling off” its love affair with cars, and that is a factor pushing the global economy toward a recession, according to two economists at HSBC. “Car demand is in decline due to a greater focus on environmental policies, increased urbanization and investment in alternatives — be it on- demand cars or public transport,” according to the HSBC economists Janet Henry and James Pomeroy.
“Parts of the world are already in industrial recession,” Henry and Pomeroy said in a note to clients seen by Business Insider. “Much of the weakness in the global economy has been concentrated in the manufacturing sector: the global manufacturing PMI has dropped by 3.6 points since the beginning of 2018 while the services PMI has edged down by 1.6 points,” the note said.
According to recent numbers from the Federal Reserve Bank of New York, a record 7 million Americans are at least three months behind on their car loan payments. That’s about a million more than there were in 2009, the end of the last recession. By the summer of 2018, Americans owed $1.26 trillion on their cars, an increase of 75 percent from the end of 2009. High-interest subprime loans aimed at purchasers with low income and poor credit scores made up as much as 26 percent of all auto loans issued in 2016, up from 14 percent in 2009. These loans may seem “predatory” in nature, but ultimately, the consumer should take personal responsibility and avoid buying a car they cannot afford. Many Americans assume an affordable car is one that they can make the payment on if their current financial situation doesn’t change.
Car debt can also put a huge financial burden on those with other types of debt too. All forms of debt have shot up recently too, including credit card debt and student loan debt putting many Americans in a dire situation once a financial crisis or recession finally hits home.
When more households fail to make payments on their vehicle, the implication is that they’re not financially healthy enough to maintain a grip on even their most important depreciating asset. But we are constantly being told not to worry, the economy is in great shape, the government has it all under control, and people are doing just fine. All logical indicators point to otherwise.
What do they expect? The average working stiff can’t afford those overpriced vehicles.
and thats by design. the banks want you to take out a loan so they can charge you interest on your over priced vehicle.
but ultimately, the consumer should take personal responsibility and avoid buying a car they cannot afford.
HAHAHAHAHAHA
But it is ALWAYS someone else’s fault.
Its not really failing, it’s just way overbuilt. Too many plants, too many workers, too many high priced vehicles. Kinda like fast food restaurants on every corner, some stacked on top of each other. Great business plan. Sell all these 40k vehicles to people that make half that on 7 or 8 year notes. What’s next? Forced purchase and auto paycheck deduction in the name of national security?
Beerman, that’s for people who can get the car loans. My company just bought me a new truck because they didn’t want me to go to craigslist to buy an old one for cash. They also knew they weren’t paying me enough money to qualify to credit. People with credit problems don’t have any good options available to them so what else they can do? I’ve used craigslist before and I know the risks involved but like I said what else can people with credit problems do? It is what it is. To me credit is a luxury but that’s just me.
A manufacture that would make a SIMPLE car without all the “junk”, price it at $9,999 will rule.
A 2019 Model T.
Wal-Mart could do this. Buy a car plant in China. Make one 4 door model, one small SUV and one medium Pick-Up. V-6. 3 colors, Red, White or BLue and sell them in the store. Price them at ONE PRICE.
Only if we get Michelle Obama as president……
Good! Maybe the prices will start coming down so people can actually afford a car without a loan.
Jesus will fix this.
cant a ford new car. drive n old chevy and paula.
all i can a ford is an old chevy and paula
The county that we live in in north/central Florida, 47% of the population lives either near or below the poverty line. Yet the Churches are full on Sunday, the restaurants do a good business, Cops and teachers get paid, and the grocery stores are full of food. Go figure? A Country Boy will survive!
Watch out fur dem hogs!
It cost nothing to go to church. The people are on food stamps so their food is paid for by someone else (you and me) that frees up money to go out to eat as many young women don;t know how to cook anyway.
next question.
When price growths exceed wage growth people
can’t afford as much.
Government policies have driven the cost of basics
to stellar heights, but at the same time suppressed
wages( eg immigration policy, politically driven regulation
and overtaxation leading to outsourcing).
Ki ll Democrat politicians and you’ll find
things will become affordable again.
The republicans were philosophically at the core of free trade with its lowering of labor cost. The democrats joined in betraying their labor constituents with Bill Clinton. Politics is now divided between nationalists and globalists. The distinction between republican and democrat on foreign affairs and trade are blurred to non existent.
Rellik, good points. One thing being overlooked in the article is the credit policies. A growing number of people don’t make enough money to even qualify for credit. The criteria in the credit policies has become more strict since the Obama era and even when you meet all the criteria you’ll still have trouble getting financing. I don’t make enough money to even worry about credit so I just stick with the old cash vehicles normally but now I won’t have to. My company just recently bought me a new 2018 Dodge Ram pickup because they didn’t want me going back to Craigslist for another old vehicle and having problems again. The “finance game” is for people who are better off than I am. The company furnishes the gas, repairs, and insurance so it’s win-win for me all around. I used to get ridiculed by people I called stupid middle-class snobs for buying old cars and breaking down all the time. Hell, I was just living within my means and doing what my circumstances allowed me to do.
Due to the price of a new vehicle people are keeping them longer and fixing them. I just replaced my 11 year old, which had an engine replaced 3 years ago, which was cheaper than a new truck. Just recently it started giving me more problems which was costing me more money to repair. I finally leased a vehicle (first time) and we will see how this works. With all the dealers in the area its hard to believe they can move that many vehicles at current prices – $40K+
Wojo,
My newest vehicle is 15 years old. I paid $3,500 cash for it.
A 4 door, 4WD, stick shift, Pick-up, it was a top of the line model with all the off road, towing, and fancy goodies when originally purchased( I have the original paperwork for it). It has a few dings and some irritating things wrong with it, but it hauls a$$ and gets me where I want to go. I can fix this thing as long as parts are available. I do my own repairs. If you have to pay someone else to do car repairs(in Hawaii they almost always do it wrong), you may want to buy new or lease if you don’t put a lot of miles on a vehicle.
Firstly, there was a monopoly.
But, noone seemed to notice.
Are other means of transport physically possible? Yes, but illegal.
“These loans may seem “predatory” in nature, but ultimately, the consumer should take personal responsibility and avoid buying a car they cannot afford.”
You have justified giving them the freedom to travel, in expensive equipment, at dangerous speeds, in spite of having failed elementary school math. Employment is basically a privilege in this country, and you wanted the people with no personal judgment.
Not a serious country.
They are over Engineered pieces of JUNK.
Way too much tech to be reliable.
There’s no such thing as a fender bender anymore, they should be renamed a Plastic Shatter.
85 month loans on a piece of sh** that needs to be traded in every 3 years because you can’t afford to fix it are ridiculous.
Detroit cut there own throats, trying to satisfy the need for hi-tech not the need for functionality
May They Rest In Piece
Think Kia or Hyundai. At least they come with a 5 year bumper to bumper warranty.
People need transportation to try to keep their head above water. Thanks to NAFTA and GATT, most people work at a dead end job. Then along came OBAMA Care. Raised the medical premium for most working stiffs. AND now, we see people defaulting on their loans… IMAGINE THAT (sarcasm btn on)
Tuesday, that’s what happens when people try to live beyond their means, ‘keeping up with the Joneses’, etc. Hell I don’t even care what the damn Joneses have. They should save up enough for the cash price on a car and go on Craigslist to find something for sale by a private owner. Pay the whole cash price right there on the spot and that’s one less major bill to worry about. What they would’ve paid on a monthly note they can save toward any future repairs the car may need. The only insurance they’ll need is liability.
DR,
I have a comment about liability insurance.
If you are debt free and own your home, make sure you are
covered VERY well. Including a 1 to 2 million Umbrella policy.
While I have never been found to be at fault for an accident,
other people using my vehicles have been, and I’ll put it this way, The amount paid out by the insurance company would take about 70 years to recover from my premiums and today I have top notch coverage.
Had I owned my home debt free at the time, they would have sued above and beyond the insurance payout and won.
I still had to pay beyond my insurance coverage at the time, but being a small town, the widow gave us a break and didn’t destroy us financially, just a major slap.
Obamacare is quite lucrative if you’re able to get by on a low-wage job. A single person living in Florida only needs to earn $12,140 to get a fantastic silver plan with $0 per month premium, $0 deductible, $1 per doctor visit, $5 per specialist visit, $2 prescriptions, etc. Since there is no income tax in Florida, a person gets to keep most of what they earn, as well.
Not to fear … I expect that at any moment now the delightful young AOC will save us with a chicken-in-every-pot, Green New Deal, Cash for Clunkers 2.0 program that promises to save the planet, provide millions of high-tech jobs, give free high speed transportation to the working masses all courtesy of the evil corporations paying their fair share … or some such crapola. I wouldn’t mind one of those 800 hp Dodge Challengers though.
Sorry but no such luck with the Dodge. In fact, we will all be riding bicycles while wearing gray uniforms if the filthy shit stain leftists in Congress ever get their way.
I think the auto industry is not the industrial driver but rather the canary in the coal mine, the sentinel warning of an upcoming decline in economic activity.
Chances are your wrong on your perception. The future is driver-less and owner-less cars. They aren’t planning to manufacture cars for you to own and have in your driveway. So, slowly you lay off people and consolidate plants as the technology comes on line and they finish installing the infrastructure; 5G and the fiber being put in your neighborhoods. You know why its easy for them to pull this crap off? Most of us can’t see the forest because of the trees.
Anyone with children under 5 years old now and going forward… your child will never touch a steering wheel.
Get a clue you maroons.
You’re, my bad
Ghana Serapis,
While changing the spelling of your first incorrectly spelled word, how about adding the proper spelling of “Moron” unless you intentionally meant to call a person a color.
it MAY Be possible that when he said “maroons”, he was referring to the term used in “roger rabbit”……there IS precedent for using the word spelled HIS way………just sayin’….
Personally I would rather own a dependable older vehicle that can be worked on at home rather than a new disposable model that I can’t work on and costs hundreds of dollars to take to be repaired. We own 2 1996 vehicles and a 1978 pickup, all kept in good running order by my husband.
Can we call anyone driving a foreign car the domestic enemy? Or a traitor ? Or just uncaring, or just plain stupid?
TH:
It is much more gray than black or white.
Do a little research on how intertwined the multi-national auto companies are.
Simply put, is there any such thing as a domestic auto company any more ?
<bb
I read they import parts and assemble them here to avoid tax? I don’t know what to believe. You are right it’s not so simple . Confuse the enemy? The truth shall set you free? But how do you find the truth?
American car companies sh*t the bed in the 70’s and 80’s. The CEO’s, the engineers and the sales teams, all set themselves up with a decent pension while designing most of these cars either hungover or stoned (This was before drug testing in the workplace became more strict). The reliability of most American built cars probably up to today is laughable compared to a Japanese built car. I work on cars for a living, and can tell you, if you want to buy a used car, the best bang for your buck is a Japanese car. If you are mechanically inclined, then a used, older American car will serve you well, you just won’t get the fuel economy of a Japanese car. In my family, we have 3 Mazdas, 1 Honda and my work truck a 98 Silverado Diesel. Would I like a new Chevy truck, sure, if I was given the money, but no way am I going to trade $75,000 of my time to replace what I have in the 98 version I got for $6000. Yes, it is pain in the butt the amount of time I spend keeping it running, but I kind of enjoy making things better, so that’s how I choose to spend some of my free time. I would probably label “stupid”, as you call it, the people buying these American cars for 50-70k, of which 15k goes to people that aren’t even involved with the company anymore. I paid cash for my truck, pay cash when it breaks and usually enjoy a year or two of trouble free service, that is the cost of transportation. Can you pay cash for a 2019, fully loaded crew cab Silverado diesel? If so, then good for you. I cannot, so I go to work in my 21 year old diesel crew cab, and help pay for the 18 other people not related to me that are depending on my paycheck.
Who cares about the auto industry. I’m gonna get around as cheap as possible. They aren’t getting my $ ever. I dread the car buying process. Been driving the same vehicle for 15 years now. Haven’t had a payment in 8 yrs. sure I’ll run back to a payment when I’m driving for free. cant tell you how much shit I’ve hauled in the truck. Still runs like a raped ape.
And several of the house democrats are pushing to ban fossil fuel by 2028, there goes not only the auto industry but our entire economy.
I live in S. Florida and the trend I see is that young people in high school and college are not driving or getting their license. They have Mommy and Daddy drive them everywhere or pay for Uber. I know more 16 to 18 year olds who have never driven, than ones who do. And they don’t want to.
The automotive culture pushes everyone toward a “failing automotive industry” that “pushes everyone toward a recession”.
The average automobile on the road today is 12 years old. I can remember my dad telling me as a young kid, that people trade cars because the looked out of style. Oh! but that was in the 1950’s when they had good employment.
Article is a bit misleading if you analyze closely. It speaks of the failing automobile industry, which is true. Nobody much buys american made cars so Ford, GM, and Chry are all but eliminating production of traditional cars. What the article did not say is that our truck sales are booming and increasing, they cant build them fast enough. And unlike cars where the Japs and Koreans and Germans have built what the consumer wants, pickups are still in our territory but the Tundras and Titans are gaining ground. I thing GM and Ford/Chyr are making a mistake eliminating cars as when you think about it just solely government and law enforcement could buy enough to keep a full size line going and then add in the corporate and private sales should be plenty . Gm has recently restyled the Impalla into a pretty car and it appears it sells well, why kill it when they finally build a attractive car, the old Impalla was good but just plain ugly. The Impallas old and new are really good cars that can compete with the Japs in dependability, and now in style. Ford will shortly bring out the new Ranger which will sell like hotcakes. Chrysler is planning a new Dakota of which should never have stopped production. I guess what I am saying is that a large part of the problem is that Detroit could be slightly out of step from what we want in a car but very well in step with the truckbuyer, at least for now until the Japs ect offer more choices. KF
The average automobile today on the road is twelve years old, we all know why, the press will tell you that auto last longer and are better built. The truth is that the jobs are gone and we cannot afford or won’t take the long term chance to buy a automobile. Can’t keep a job that long layoffs downsizing and the like. 1950’s I as a child remember my dad saying people traded cars because they were seen as out of style. But that was when they had 20 to 30 year retirement jobs that paid decent.
One third of the new vehicles on the road today are leased.
Welfare..The great equalizer for liberals
There is a lot to be said about the reliability of todays’s autos. Unless you just like to be in debt why would anyone buy a new car every few years? We just got back from a small cruise and drive to Miami, FL from out of state in our 13 year old car.