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The Traditional Car Market is in Steep Decline — 4 Points

1. There is a large gap “between capacity and demand for the automaker’s sedans.” Essentially, the car market is struggling.

2. Over the past six years, traditional passenger car sales in North America have been declining as consumers are electing to purchase more SUVs and trucks. Specifically, in 2014, sedans accounted for 48 percent of vehicle sales compared to under 33 percent this year.

3. In response, auto manufacturers are closing plants, including General Motors recent announcement to close 5 plants. In 2019, GM will have 4 U.S. plants (although operating at under 50 percent capacity), and Ford and Fiat Chrysler will only have one each. Toyota and Honda are struggling as well.

4. “Industry analysts have said the general break-even point for running an assembly plant profitably is around 80 percent,” and many American plants are operating below 50 percent (like GM) or are abandoning passenger car production (like Ford) altogether.

Source: https://www.reuters.com/article/us-gm-restructuring-autos/car-market-collapse-outruns-gm-moves-to-keep-up-idUSKCN1NX1IP

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