Has U.S. auto industry reached its peak?
One forecast says yes
A new forecast by global business advisory firm AlixPartners says the U.S. auto industry may have reached its peak, starting with 16.3 million sales this year.
Of most immediate concern, the study points to a belief by many economists that those actions by the Federal Reserve will likely lead to an increase in interest rates starting next year. If consumer interest rates were to rise 3 percentage points about the normal historical increase when rates go up in a managed fashion after a prolonged downward trend that would translate into $2,500 less purchasing power for car buyers, the study says. If rates were to rise 7 points, which is much less than the rise in the early 1980s recession, that would mean $5,250 less purchasing power.
If the pulled-ahead sales of the 2000s are taken into account, U.S. auto sales are on track to pass their long-term trend line this year, the study says. In addition, the vehicle renewal rate has been on a long-term decline and is approaching replacement levels. Vehicle usage rates are also declining, because of both aging baby boomers and younger Americans, whom AlixPartners has dubbed Generation N, for neutral about driving.Download Bulletin PDF