There are a lot of interesting trends in 2012 in the auto manufacturing sector. We’ve recently noted that China is trying to cut back on foreign automakers selling in their country, putting on more restrictions. This is not good for US, Japanese or European auto makers. Indeed, due to the natural disaster in Japan with the major earthquake and tsunami the Japanese automakers are still trying to recover, and the floods in Thailand didn’t help either.
However, with those major supply chains disrupted it has been a boon for US automakers which have taken back nearly all of the market share gains that the Japanese automakers had secured in the last four years. But that doesn’t mean everything is great with the US automakers either, there are still tens of thousands of former auto workers still out of work, and we aren’t nearly back to our 17 million cars sold each year as we were back in 2005 to 2007.
Although the Obama Administration is taking credit for the spectacular showing of GM and Chrysler after the bailouts, things are not really as stellar as we might believe. This is not a political statement, just an industry reality. For instance General Motors’ Volt has been a total flop, and the cost of batteries for these electric cars has driven up the cost where the return on investment just doesn’t make sense even with the potential of gasoline prices surging over five dollars per gallon in the spring and summer of 2012.
Another interesting trend which hasn’t gotten a lot of press, although there were articles in the Wall Street Journal, has a do with the fact that the younger generation is spending more time online at Facebook, and many of the kids don’t even care to own the car, they can stay in touch with their friends online. In fact it used to be when a young man turned driving age he wanted to get a car to impress the girls, but now he doesn’t need a car, he can impress them with cool photos on his Facebook page.
The reality that this demographic is not buying new cars is going to hurt US automakers on the low end, it means their entry level cars will not be selling as well, and many of these kids will be entering the car market 5 to 10 years later than usual. Many of these kids may grow up to be 25 to 28 years before they buy their first car, perhaps after college and getting a degree.
Of course by then they will have substantial student loans and will not be able to afford them anyway. These are just some of the trends in the auto manufacturing sector in 2012, but you should probably subscribe to my articles so that you don’t miss up-and-coming trends as they occur.