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Analysts Warn About the Inevitable Slowing Down of the US Market in the Near Future

2015 was a record year for the US, where the car market saw 17.4 million vehicles go off the shelves and onto people’s driveways. This marked a new record in the country’s history beating the previous best year that happened way back in 2000, before the 2008 recession.
Ford F-150 Raptor 1 photo
The promising prospect is that, following the great slump in 2008 and 2009, the automotive industry has been on a constant rise, and the trend is expected to continue through 2016 as well. But if this financial crisis we’ve only just come out of has taught us something, is that continuous growth isn’t sustainable and, at some point, it will have to stop.

The good news is that we’re still a few years away from that moment, the bad news is nobody can predict exactly when it will happen. Also, what’s worrying the analysts is that the industry is currently so taken with meeting the current demand that it isn’t planning for the future as carefully as it should be.

Recent years have brought an interesting change in the way the industry functions. Instead of a few models sold in high volumes, most brands now offer numerous different products that sell at lower volumes. This shift is what forced car makers to start thinking about modular platforms that can be used for as many models as possible, thus reducing manufacturing costs and lessening the strain put on suppliers and the actual production process.

One of the industry analysts issuing medium-term warnings is Laurie Harbour, CEO of Harbour Results Inc. In an interview with Automotive News, she made it very clear: "We all know the industry is going to adjust. It’s not going to be a 2008 adjustment but will be some kind of adjustment. It has to."

According to her evaluation, only two years from now, 80 percent of the registered vehicles will belong to models produced in volumes of under 100,000 units. Going further down the supply chain, that means smaller volume orders for parts from the manufacturers, which in turn means higher prices per unit.

The analysts don’t provide the solution as well, that’s up to the suppliers and manufacturers to figure it out. In some ways, they’ve brought this on themselves on their own by trying to compete in every segment and constantly building new ones. Their pursuit of competitiveness might turn into a struggle to stay alive, unless they manage to strike a balance between satisfying the current market and planning for the future one.

 
 
 
 
 

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