Once upon a time, the problem might have be defined as US automakers losing ground to foreign competitors. But today there is a new reality. Consumers are cash strapped and maxed out on credit. Wages are stagnant. Home equity has declined.
US auto sales fall for many firms beyond Big Three | csmonitor.com
The auto industry's downturn is not a Detroit problem, it's affecting companies around the world.
As the automotive industry closed out the 2008 calendar year, brands like Toyota, Honda, and BMW joined the US-based carmakers in reporting sizable sales declines. During the month of December, all those companies reported that sales were down 30 percent or more from the same month a year before.
It's a sign that the industry's problems are rooted heavily in the wider recession for US consumers, not just in the long-term challenges of product mix and labor costs that burden America's homegrown automakers.
The shared sacrifice doesn't make things any easier for the Detroit Three: General Motors, Ford, and Chrysler. GM reported a sales drop of 31 percent Monday, while Ford said its sales volume was down 32 percent. Chrysler's sales fell 53 percent in December.
The auto industry gets hit early and hard during recessions. That's because cars are big-ticket purchases that consumers can choose to postpone. In the current economic downturn, a range of factors have piled on: once-high gasoline prices, a squeeze on the availability of loans, and the decline in household wealth rooted in the drops in the housing and stock markets.