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Future of Auto Industry Uncertain Says Experts

Mechanic man holding clipboard and check the car

More than 50% of the United States’ products require some form of welding. Of those, the most well known would be from the auto industry, with cars requiring assembly by welding more often than not.

But the U.S. auto industry is staring at a rocky future, according to some reports. And with it contributing billions to the U.S. economy each year, that could mean trouble ahead for a lot of affiliated industries.

The industry saw a massive amount of growth in recent years, showing a dramatic recovery from the Great Recession in 2008. The last two years, in particular, have shown record sales in the auto industry.

So how could the industry be in trouble?

The auto industry is slowing down and dropping in monthly sales as demand continues to fall. This has been a continuous theme, with June and the five months prior all showing the trend. Assembly plants that build passenger cars experienced the largest hit with a 2% fall in employed workers on the factory floors.

And analysts don’t see an end to the trend soon.

“There’s been a consistent reduction in plant output in the last six months, and what is ahead in the next six months could be pretty startling,” Ron Harbour, an auto manufacturing expert at the consulting firm Oliver Wyman.

In contrast, however, factories making sport utility vehicles and trucks are doing well, largely thanks to the lower gas prices. Small truck sales rose 4% from the year before, and the President himself touched on the issue of gas prices.

“Gas prices are the lowest in the U.S. in over ten years! I would like to see them go even lower,” said President Trump.

Sales aside, even the factories making sports vehicles and trucks are not creating a great deal of employment or constructing new plants. They’ve also slowed to a halt. And without new plants or employees, the industry isn’t likely to grow more than a few percentage points.

“The industry has dramatically expanded employment in the United States in the last several years, but the growth is just not there anymore,” Harley Shaiken, a labor professor at the University of California, Berkeley, said.

Even the auto parts industry has taken a hit from the slow growth, with O’Reilly being an example. Their stock dropped 20% recently as sales were shown to be lower than expected.

Experts speculate that the industries trend will continue for the foreseeable future, and so far the market shows no signs of otherwise.

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