Are car loans driving us towards the next financial crash?

[emordnilap]

I question if there is actually a drop in global demand. And if there is, is it from a lack of desire to become more mobile or is it a temporary decline in personal ability to pay or in the confidence needed to sign onto a five year loan?

It depends upon whether they’re talking brand new or all car sales. I suspect only new: as cars are now lasting longer than last century’s there’s a glut of perfectly good used vehicles.

[emordnilap]

It depends upon whether they’re talking brand new or all car sales. I suspect only new: as cars are now lasting longer than last century’s there’s a glut of perfectly good used vehicles.

[raspberry-blower]

It depends upon whether they’re talking brand new or all car sales. I suspect only new: as cars are now lasting longer than last century’s there’s a glut of perfectly good used vehicles.

The decline is in NEW cars - people are maxed out and are having to adjust accordingly. They are going after second hand cars instead. Wolf Richter discussing the US market here however the fundamentals behind this are also true in other markets - UK & Ireland amongst them.

But even there, the flow of used cars is slowing down, and given the strong demand for them, prices are surging. Clearly, something is out of alignment.

[vtsnowedin]

I question if there is actually a drop in global demand. And if there is, is it from a lack of desire to become more mobile or is it a temporary decline in personal ability to pay or in the confidence needed to sign onto a five year loan?

It depends upon whether they’re talking brand new or all car sales. I suspect only new: as cars are now lasting longer than last century’s there’s a glut of perfectly good used vehicles.

The piece is about new car sales only (including leases)in the UK. Reasons sited were the new aversion to diesel cars and uncertainty of the Brexit outcome. A " let's wait and see attitude" can make a big difference. Worldwide last year was still an increase to 81 million new vehicles sold but that might dip in '19 if recession hits China and India.

[vtsnowedin]

When discussing the USA auto market you should keep in mind they already have 268 million cars and trucks registered while there are only 222 million licensed drivers so they don't actually "NEED" any more.

[raspberry-blower]

Worldwide last year was still an increase to 81 million new vehicles sold but that might dip in '19 if recession hits China and India.

China is one to watch - looks like their economy is slowing up. New car sales in China declined by nearly 14% last year source

[vtsnowedin]

Worldwide last year was still an increase to 81 million new vehicles sold but that might dip in '19 if recession hits China and India.

China is one to watch - looks like their economy is slowing up. New car sales in China declined by nearly 14% last year source

You need to read the story more closely. The top line was only for the one month of November. Alarming but not the whole story.

New-vehicle sales in China plunged 13.9% in November, compared to a year ago, to 2.55 million units, the China Association of Automobile Manufacturers (CAAM) announced today. This was the fifth month in a row of year-over-year drops, and the steepest year-over-year drop since January 2012, which had been caused by the timing of the lunar new year. November brought sales for the first 11 months to 25.4 million new vehicles, a drop of 1.7% from a year ago.

- 1.7% year on year is not growth and is troubling but it is not a 14% drop. They have a lot of first time car buyers that have bought last year and are now enjoying their new car while working hard to make the payments. How well they are doing making those payments is the real story and harder to glean from the statistics.

[kenneal - lagger]

The worldwide drop in car sales is affecting the UK's manufacturers but the blame is falling on Brexit of course.

[vtsnowedin]

The worldwide drop in car sales is affecting the UK's manufacturers but the blame is falling on Brexit of course.

People make large purchases when they are optimistic about the future as far out as the payments will last. The confusion of the Brexit debate and uncertainty of the final outcome will put many a normal person into a wait and see attitude which will depress sales for a while. I've seen it mentioned in several trade and economic papers. HMG needs to get on with it one way or the other.

[kenneal - lagger]

... HMG needs to get on with it one way or the other.

I agree with the "needs to get on with it" bit as do many posting here now.

[raspberry-blower]

Inevitable:

BBC Honda set to close Swindon plant

[Little John]

So, after reporting that the CEO has stated, unequivocally, that the closure has absolutely nothing to do with Brexit, the rest of the article then goes on to insinuate that it might have something to do with Brexit.

Give me a f***ing break....

[emordnilap]

Indeed, it wouldn’t surprise me if the car industry globally is in for an overdue shake-up.

[raspberry-blower]

Indeed, it wouldn’t surprise me if the car industry globally is in for an overdue shake-up.

Already started Emo - Ford and GM announced that, between them, they would close 8 car plants. Now the Chinese car market is cratering there is going to be an awful lot of over capacity.

I would like to see how the bbc will try and spin the crashing Chinese economy as the result of Brexit!

[emordnilap]

Indeed, it wouldn’t surprise me if the car industry globally is in for an overdue shake-up.

Already started Emo - Ford and GM announced that, between them, they would close 8 car plants. Now the Chinese car market is cratering there is going to be an awful lot of over capacity.

I was thinking bigger than that, even, though those examples will have a major effect.

There's the relentless pursuit of ever-bigger dividends; then there's the coming economic tsunami; then, there are already enough vehicles in the world to use up remaining fuel; also, cars generally are lasting longer; the second-hand market is flooded; on top of that, fewer people have spare money or are already loaded with debt; electric cars, with lower running and maintenance costs, threaten traditional factories; there's probably a few other factors I can't think of right now.

All in all, it's looking interesting.