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US Auto Industry Gets a Boost, But for How Long?

Oct. 21, 2015
Economic indicators show U.S. motor vehicle output staying flat in 2016, then declining slightly in 2017 and 2018.

With housing starts and employment growing steadily this year, the U.S. automotive industry enjoyed its best summer sales in a decade, the Ann Arbor, Mich.-based Center for Automotive Research reported in its just-released fourth quarter newsletter.

 Seasonally adjusted annual sales in the U.S. were at 17.7 million units in July and August, and 18.2 million in September, the highest since 2007.

Other highlights of CAR’s U.S. Automotive Outlook:

  • U.S. motor vehicle output could stop growing in 2016 due to a slowdown in global demand and production shifting to Mexico, then decline slightly in 2017 and 2018.

  • North American motor vehicle production is expected to increase in 2016 due to stronger domestic demand, with the majority of the output expansion in Mexico. Canadian motor vehicle production is expected to contract further in 2016.

  • The U.S. auto market could expand in 2016 beyond its previous peak at 17.2 million, to 17.5 million. But some analysts are predicting the next recession could come as early as 2016, with labor force participation at its worst level in 40 years and the increase in U.S. student loan debt to $1.2 trillion (the highest non-housing debt carried by U.S. households).

  • With economic contraction in Asia and other emerging markets, the Mexican automotive industry will be even more reliant on the North American market. Already, the majority of Mexican motor vehicle exports are shipped to the U.S.

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