AFP: "With US sales boom over, carmakers enter belt-tightening mode"

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AFP: "With US sales boom over, carmakers enter belt-tightening mode"

Excerpt from Agence France-Presse quoting DataTrek’s Nick Colas:

…. “On Wednesday, US President Donald Trump on Twitter threatened new tariffs on car imports, amplifying his response against GM, whose job cuts affect the politically crucial states of Michigan and Ohio.

Auto cycles typically end with a five or 10 percent drop, a relatively modest decline that automakers take as a signal “to get their production house in order,” said Nicholas Colas, co-founder of DataTrek Research.

“You know that once you’re passed the peak, you have nowhere to go but down and that’s what scares auto executives,” said Colas, adding that auto sales could go as low as 13.5 million in a recession.

Adding to the dilemma is uncertainty about the outlook for new car sales in the medium term given potential technological disruption.

Will more drivers opt for ridesharing and against owning their own vehicle? How many consumers will opt for an electric car once more vehicles hit the market at lower price points? When will autonomous driving arrive in a meaningful way?

“No one has any idea what the next cycle is going to look like,” Colas said. “In this case, GM not only has to plan for normal cyclicality, but GM clearly feels it needs to plan for the next five to 10 years”….

Read the full article and the rest of Nick’s comments here by Agence France-Presse!