Worried about the second bottom of the economy to aggravate the trend of the automotive industry

At present, the turmoil in global financial markets has triggered people's concerns and discussions about the new round of financial crisis and the economic bottoming out. In the same way, the unoptimistic macroeconomic situation has begun to affect the overall trend of the auto industry and has determined the industry’s future outlook.

This year, the global auto market that has just embarked on a recovery path will turn downwards or continue to maintain the trajectory of recovery, becoming a new topic of concern for the industry.

From the macroeconomic environment, the prospects of the automotive industry are indeed not optimistic. Correspondingly, several industry research institutes began to downsize the forecast for the US automobile market; similarly, the demand in the European market is also continuously declining; and the Chinese auto market entered a cyclical adjustment as early as the beginning of this year.

For the automotive industry, it may take some time before the economic turmoil can be felt. However, in the face of economic turmoil, consumer confidence is the most critical.

The optimistic automobile market expects the slow growth of the US economy and the impact of the turmoil in the global financial market, all of which will increase the risk of a double bottoming in the economy. The increase in sales in the US automobile market in July was less than 1%, which led directly to the industry analysts' downward adjustment of the auto market's sales forecast this year and next year.

J. D. Power's forecast for US vehicle sales in 2011 was revised down from 12.9 million units at the beginning of the year to 12.6 million units. In 2012, sales forecast was reduced from 14.6 million units to 14.1 million units.

"Demand will continue to grow slowly, but we will not achieve the sales forecast for the beginning of the year." D. Executive Director of Power Global Forecast believes that the economy will not develop as expected in the second half of the year and consumers will continue to be cautious.

HIS also reduced its forecast for US market sales this year by 200,000 vehicles to 12.5 million vehicles. As for the sales forecast for 2012, it was downgraded from 14.7 million vehicles to 13.5 million vehicles.

Ed King, director of industry analysis at AutoPacific, believes that the current bad news is everywhere, which will affect consumer confidence in buying. In the coming months, consumer concerns about US Treasuries and the impact of capital market shocks on consumer wealth will all lead to continued market slump.

In Europe, Volkswagen, Fiat and General Motors are offering cheap financing and cash rebates to attract indecisive European customers as the debt crisis shows signs of deterioration in car demand.

J. D. Power also lowered its forecast for car sales in Western Europe this year. It is expected that delivery in Europe this year will fall by 1% to 12.84 million vehicles, compared with a slight increase to 12.99 million vehicles.

Even in emerging markets, there is no good news.

According to data from the Indian Automobile Manufacturers Association (SIAM), as the world’s second-fastest growing auto market, India’s sales in July fell by 15.8% to 133,747 units, which was the first sharp decline in sales in the Indian market in two and a half years. At the same time, in the coming months, rising interest rates and rising manufacturing costs will continue to keep demand weak.

Although the sales volume in the Chinese market increased by 7.6% in July, this was mainly due to the Japanese replenishment of inventory after capacity recovery. An industry source told the "First Financial Daily" that in the second half of the Chinese auto market, the bears will remain unchanged, and the big pattern will not change.

Diverse views from the industry Although industry analysts and investors face uncertain economic conditions, they are cautious about the trend of the auto industry, even pessimistic views. However, automakers are cautiously maintaining their auto industry's continued recovery.

Since the first half of this year, automakers have begun to firmly believe that the industry has embarked on a path of sustained recovery and has gradually increased its investment.

In May, General Motors announced the start of construction of an electric motor plant near Baltimore, Maryland. General Motors said that this motor plant is part of a total of 269,500 million U.S. dollars announced by General Motors last year; Chrysler also started hiring more automotive engineers and auto R&D personnel.

And Lacey Plache, chief economist at Edmunds official website, does not believe that a downturn will hurt the auto industry. She stated that all market factors indicate that credit will continue to be provided, interest rates will remain stable, and incentives may help keep cars sold at low prices in the near future. U.S. government bonds are still very strong because stock market investors are rushing to make safer investments. At the same time, auto lenders feel more confident that they may not withdraw their credit. However, consumer confidence remains the key to the recovery of the auto industry.

At present, the labor negotiations between the Detroit automakers and the U.S. Auto Workers’ Federation are continuing. Both parties do not believe that the deteriorating economy is a big factor affecting the signing of new contracts.

However, General Motors CEO Elkson said on August 9 that the US stock market is in a state of severe turmoil. It is not yet clear whether this will affect the successful completion of GM’s sales target in the US market this year.

Ford and GM recently forecast that the US market will sell at the low end of 12.5 million to 13.5 million vehicles. However, Chrysler's forecast is relatively optimistic, insisting that this year's annual sales will be 12.7 million vehicles.

Despite Chrysler’s optimism, Chrysler announced new promotional policies and discounts in recent days due to concerns about the market in the second half of the year and launched the “No Payments for 90 Days” campaign. That is to say, consumers who purchase Chrysler series models do not need to pay within 3 months through the joint financial company mortgage.