Without incentives, the consumers are less likely to purchase cars in the United States, but automakers are confident that once consumers see that those incentives will never return, sales will actually increase again. Meanwhile, foreign markets carry the burden of making profits for these car companies while the United States car market remains dormant.
Wednesday, September 1, 2010
Weak auto sales for August amid economic worries
This was the worst August since 1983 for car sales in America. The four giants General Motors, Toyota, Ford, and Honda all reported a decline in sales from this August, and the year before. Although with the success of the Government's cash for clunkers program last year, this August was not expected to be similar in sales numbers; however, consumers are still fearful of the slow economy, and similarly, the automakers are not offering consumer incentives.
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This is interesting because what some people are worried about is that we might experience a lost decade like Japan in '91-'00. This "lost decade" could happen if:
ReplyDelete-Prices don't move anywhere
-demand doesn't increase
-Interest rates don't go any lower
-4.5% or less for a 30 year fixed mortgage and people still are not buying houses at their depressed prices...
I don't think this will happen, I think recovering from this recession is going to be slow and steady. Company's and people are saving, not spending. We are playing a confidence game. It's time for people to start spending.
One way of inducing people to spend rather than save their money is by lowering interest rates. Once the demand for cars increases, car companies will increase their production, causing the market price of cars to decrease. The increase in production will in turn generate more job opportunities in the automobile industry.
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