Talk of an imminent sharp dive in U.S. auto sales is economically illiterate and ignores evidence that a shakeout normally requires a recession and rising unemployment to poison the market’s health.
The idea that consumer lending is in crisis is also wrong, and worries that long-term threats to car sales because the young are eschewing driving in favor of Uber-like car hiring and sharing, ignores the fact most sales come from older people.
That’s the view of Bernstein Research analyst Max Warburton, and it clashes with the recently published opinion from investment bank Morgan Stanley that U.S. car sales are about to dive by between 1 million to 4 million annually over the next 3 years, with buyers blitzed by fears of a credit crunch, falling second hand prices, and worries about early obsolescence. The downward spiral can only be saved by another government “cash for clunkers” subsidies.
“A stretched consumer, falling used prices, and technological obsolescence of current cars are ingredients for an unprecedented buyer’s strike,” Jonas said.
Jonas’s 2017 forecast looks relatively benign at 17.3 million, down from a previous estimate of 18.3 million. After that it’s all downhill.
“Our 2018 forecast is cut to 16.4 million from 18.9 million, implying a further 7 per cent decline from 2017 to 2018. Our 2019 and 2020 forecasts are cut to 15 million in both years from 19.2 and 18.7 million,” Jonas said.
Read the original article from Forbes: https://www.forbes.com/sites/neilwinton/2017/06/26/u-s-auto-sales-arent-about-to-fall-off-a-cliff-long-term-conditions-bode-well-report/#41a7eaaf403d