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Auto sales will be on the decline in 2019: Ed Kim

Auto sales will be on the decline in 2019: Ed Kim


LIZ: THE NORTH AMERICAN INTERNATIONAL AUTO SHOW, AKA, THE DETROIT AUTO SHOW IN FULL SWING IN THE MOTOR CITY, BUT THE AUTO INDUSTRY ITSELF MAY BE APPROACHING A YELLOW LIGHT. A CHIEF ECONOMIST JONATHAN SMOKE SHOWED UP AND WARNED JOURNALISTS IN DETROIT AND HE SAID THAT THE AUTOMOTIVE SECTOR IS GOING TO CAUSE THE NEXT RECESSION. NOT THE HOUSING SECTOR. YAY, AREN’T WE GLAD WE INVITED HIM. LISTEN, IS IT TRUE? IF YOU LOOK AT WHAT’S BEEN HAPPENING, IT IS ON THE HEELS OF ELON MUSK ANNOUNCE ELON MUSK ANNOUNING 7% OF TESLA’S WORKFORCE WOULD BE LAID OFF AS THEY SEEK TO INCREASE MODEL 3 PRODUCTION BUT ALSO CUT PRICES TO MOVE THE CARS OFF THE LOT. THAT’S WORKERS LOSING THEIR JOBS AT TESLA. THE THIRD AUTOMAKER IN FOUR WEEKS TO ANNOUNCE CUTS FOLLOWING GENERAL MOTORS AND FORD. WHERE IS THE AUTO INDUSTRY IN 2019? WE BRING IN TIM HIGGINS TECH AND AUTO REPORTER FOR THE “WALL STREET JOURNAL” AND ALSO THE VP OF INDUSTRY ANALYSIS AT AUTO PACIFIC IS JOINING US. ED, I WANT TO BEGIN WITH YOU. IS THIS WHAT YOU’RE SEEING THE SAME AS WHAT THE COX AUTOMOTIVE GUYS ARE SEEING?>>I DON’T KNOW THAT I’M NECESSARILY READY TO SAY THAT THE AUTO SECTOR IS GOING TO CAUSE THE NEXT RECESSION. BUT WHAT I CAN DEFINITELY SAY IS THAT AUTO SALES ARE ABSOLUTELY GOING TO BE ON THE DECLINE FROM HERE ON OUT. 2018 WAS A VERY VERY GOOD YEAR BY ANY STANDARD, 17.3 MILLION UNITS, BUT WE’RE EXPECTING ABOUT 16.8, 16.9 MILLION SALES IN 2019. AND THERE’S A WHOLE LOT OF REASON FOR THAT THAT ACTUALLY HAVE NOTHING TO DO WITH THE ECONOMY. ECONOMY ASIDE, WE WERE ALREADY PREDICTING REDUCED AUTO SALES FOR A VARIETY OF REASONS, EVERYTHING FROM — EVERYTHING FROM PENT-UP DEMAND FROM THE LAST RECESSION ALREADY BEING FILLED TO RISING INTEREST RATES TO THE FACT THAT NEW VEHICLE PRICES HAVE BEEN CONTINUING TO CLIMB, MEANING THAT PEOPLE ARE UPSIDE DOWN IN THEIR LOANS LONGER BECAUSE THEY ARE TAKING OUT LONGER AND LONGER AUTO LINES WHICH MEANS IF THEY ARE UPSIDE DOWN, LONGER, THEY CAN’T REPLACE THEIR VEHICLES AS OFTEN AS THEY COULD IN THE PAST. SO FOR ALL THOSE REASONS, WE’RE DEFINITELY LOOKING AT A DECLINE IN AUTO VOLUMES FOR THE FORESEEABLE FUTURE. LIZ: THESE ARE MULTIPLE ISSUES, AND THEY ARE ALMOST IN CERTAIN CASES SPECIFIC TO EACH COMPANY. GENERAL MOTORS SAID IT JUST CAN’T SELL SOME OF ITS SEDANS ANYMORE. TESLA OF COURSE HAS COMPLETELY DIFFERENT ISSUES THAT PROBABLY DON’T SURPRISE A LOT OF PEOPLE BECAUSE THEY’VE HAD TO FIGURE OUT AS THEY GO ALONG BEING THE YOUNGEST AUTO COMPANY AROUND, IN THE BIG GROUP.>>SURE. LIZ: AND THEN OF COURSE FIAT CHRYSLER HAS ITS SPECIFIC ISSUES, THE CEO, MAY HE REST IN PEACE, HE DIED, AND THEY ARE DEALING WITH THAT SITUATION, AND PUT THEM ALL TOGETHER, AND DOES THIS EQUAL RECESSION IN YOUR EYES?>>WELL, THERE’S A COMMONALITY HERE, THESE AUTOMOTIVE EXECUTIVES ARE LOOKING AHEAD AND SAYING WE SEE SOME DARK CLOUDS ON THE HORIZON. CHINA, SALES THERE DECLINING FOR THE FIRST TIME IN A GENERATION LAST YEAR. YOU LOOK AT THE U.S., JUST TALKED ABOUT SOME CHALLENGES THERE, AND THEN YOU LOOK AT THIS OTHER THING, THE ELECTRIC CAR. CHINA PUSHING GLOBAL AUTOMAKERS TO INVEST HEAVILY THERE, THAT MEANS THEY HAVE TO SPEND A LOT OF MONEY ON THIS NEW TECHNOLOGY, PLUS THERE’S CONCERNS ABOUT COMPANIES LIKE UBER AND AUTONOMOUS VEHICLES. SO THEY ARE HAVING TO SPEND A LOT ON THE FUTURE, WHILE AT THE SAME TIME, THE PRESENT IS VERY UNCLEAR TO THEM. LIZ: ED, SEDAN SALES HAVE COLLAPSED; RIGHT? I MEAN, YOU CAN’T FORCE PEOPLE TO BUY CARS THEY DON’T WANT TO BUY, THAT AREN’T COOL OR DON’T QUITE WORK. THAT’S NOT THE PROBLEM AT TESLA. THAT MODEL S IS CERTAINLY HOT. BUT THEY HAVE THEIR OTHER ISSUES. I’M TRYING TO GET THE SENSE OF PEELING AWAY THE ONION LAYERS AND FIGURING OUT IF THERE’S A COMMON THREAD WITH ALL OF THESE PROBLEMS AT LEAST WITH THESE DISPARATE COMPANIES?>>UH-HUH, WELL IN THE CASE OF TESLA, YOU KNOW, THESE LAYOFFS REALLY DON’T SURPRISE ME IN THE SENSE THAT, YOU KNOW, OF COURSE MODEL 3 HAD A FANTASTIC YEAR LAST YEAR EXCEEDING BASICALLY, YOU KNOW, EXCEEDING EVERYONE’S EXPECTATIONS. HOWEVER, A LOT OF THAT WAS PENT-UP DEMAND FOR THAT CAR SINCE THAT CAR HAD BEEN ANNOUNCED YEARS EARLIER, BUT ON TOP OF THAT, TESLA DOESN’T EXIST IN A VACUUM, NOT FOR LONG ANYWAYS. WITHIN THE NEXT YEAR OR TWO, THERE ARE MULTIPLE LEGACY LUXURY AUTO BRANDS THAT ARE COMING OUT WITH THEIR OWN CARS THAT WILL COMPETE DIRECTLY WITH ALL OF TESLA’S PRODUCTS. SO A VOLUME REDUCTION IN SALES FOR TESLA I THINK IS A GIVEN. AND TESLA NEEDS TO PREPARE FOR THAT. THE COMMON THREAD BETWEEN THAT AND FORD AND GM IS I THINK ALL THREE ARE PROACTIVELY — I GUESS IT IS HARD TO SAY PROACTIVE WHEN WE’RE TALKING ABOUT CUTTING JOBS AND PEOPLE LOSING THEIR JOBS, BUT ALL THREE ARE PROACTIVELY LOOKING TOWARDS THE FUTURE AND REALLY TRYING TO STRATEGICALLY FIGURE OUT WHAT THEY NEED TO DO NOW IN ORDER TO ENSURE THAT THEY ARE HEALTHY IN THE FUTURE, FUTURE AUTOMOTIVE SALES DOWNTURN. LIZ: THEN YOU HAVE LOW GAS PRICES WHICH MAKE PEOPLE WANT TO BUY SUVs, ETC. TIM BEFORE WE GO, I NEED TO KNOW FROM YOU THE SITUATION YOU FOUND AT THE “WALL STREET JOURNAL” REGARDING CARLOS GHOSN WHO IS IN JAIL WEEKS AND WEEKS AFTER HE WAS ARRESTED. HE HASN’T BEEN PROVEN GUILTY. THIS SUN BELIEVABLE TO ME — THIS IS UNBELIEVABLE TO ME AND THE NEWEST NEWS IS THAT CARLOS GHOSN IS OFFERING TO PAY FOR HIS OWN ANKLE BRACELET, PAY FOR SECURITY GUARDS TO KEEP HIM FROM TRAVELING SO HE CAN GET OUT OF JAIL PRETRIAL? HOW MUCH LONGER IS THIS GOING TO GO ON?>>THE JAPANESE LEGAL SYSTEM IS MUCH DIFFERENT THAN HERE IN THE U.S. WE’RE GETTING A PEEK AT THAT. IT’S SOMETHING WE DON’T NORMALLY PAY ATTENTION TO. NORMALLY WHAT HAPPENS AN EXECUTIVE PLEADS GUILTY AND THEN

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35 thoughts on “Auto sales will be on the decline in 2019: Ed Kim

  1. You have to watch this short flick!  Absolutely disgusting.
    Obama’s Government Motors cost America trillions! — a dummy led deal.
     G.M. Bond Holders got screwed and China got the benefit of the bailout plus the U.S. advance technology
    China's CHEVY!!! 
               You really need to watch this
    Look what GM and Obama let happen with
    your $80,000,000,000.00  bail out money
    enough to build a wall around the whole U.S. 
      
    If this doesn't make "the hair on the back of your neck stand up" nothing will.
    https://www.youtube.com/embed/Lvl5Gan69Wo

  2. Auto sales will be on the decline in 2019 . Bullshit Ed . Also..when it comes to Car Sales ? Tesla isn't even a Blip on the screen .

  3. And the Hits keep coming! What Else can they do with YOUR money!

    The Abuse of VIP Military Travel by Pelosi & Rest of Congress–Using YOUR Tax Dollars – https://www.youtube.com/watch?v=VV0qIgwYqzc

    Cut the Government by 10% per year for the NEXT 9 Years!

  4. Uber & Lyft are both going IPO this year and will offer a flat monthly subscription for unlimited rides!!

    That’ll negatively impact car sales even more.

  5. IT COULD HAPPEN! Many auto loans SUB-PRIME! High-yield bonds issued by private loan companies to finance sub-prime borrowers. If borrower defaults then loan company bonds could default. All those people financing their retirements from those high-yield bonds are OUT OF LUCK! Retirement ruined…just like 2008 with the real-estate crisis and GFC. IT COULD HAPPEN!

  6. Consumer mindset is another factor. A lot of consumers are changing their mindset due to learning about better financial management and avoiding going into debt for new cars.

  7. 65% of the working people in the usa make less than $20 per hour. No one can pay 35-40k for an auto….the big corporations arent satisfied making millions they must make billions…they might sell more if they would sell them perhaps 25% above cost instead of 100%.

  8. The auto industry is making it impossible to own a car without going way in debt. It’s working the same as housing did due to people buying what they can’t afford.

  9. Income has not kept up with everything else that continues to increase in price, whether it’s food , clothing, cars or anything else. It has to crash sooner or later.

  10. We need more freedom (including for businesses) to help the workers: https://dunconomics.blog/the-addictive-cost-of-technology/

  11. i never taught i was going to buy a Hyundai.. always bought American brands.. but know they so over priced.. i ended up with $25k korean car😖

  12. New car prices are a total ripoff now. $35K+ to get anything other than a base model with no options. All made with inferior quality materials and cheap, plastic parts. I bought a new Mazda Protege in 2001. That's the first and last time I'll ever buy a new car. Going forward I'll only be buying used. Car companies are building their cars in Mexico where the cost of labor is a fraction of what it costs in Canada or the US but their prices haven't dropped at all to reflect that. Greedy car companies.

  13. It's as If price rises of these vehicles, have influenced car sales. I'm SHOCKED.

    Couldn't help notice all these car manufacturers are American. Let's ask the Koreans what they think…..

  14. The common thread is that we're in year 11 since the last crash, all economic metrics are close to where they were in 2007/2008. Young adults can't afford a small home, and are in the worst all-time auto debt and college debt. People in their late 20s to early 40s can barely afford to buy a home while having any expendable income, and they, too, are buying cars they can't afford with financing terms that exceed 6 year lengths. This happens every 10 years people. If you don't save up during year 5 through year 9 of the economic booms we get, you need to get some sound advice from people who have lived through these times over and over again. Debt is your mortal enemy. When you go into debt, you guarantee companies money that your job hasn't guaranteed to you. You lose your job, you're in the metaphorical toilet, and it's your own fault for being in debt and not having a plan.

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