The Rise and Decline of the Automotive Empire

The auto industry has been a big force in propelling the American economy forward after the end of the Great Recession in 2009. For the past seven years, it has steadily expanded, creating jobs and making big profits due partially to low gas prices. It seems as though this market is coming to the end of its good luck seeing as though consumers are holding off on “spending more broadly”. As of Tuesday, April was the fourth straight month with a steady decline in the sales of new cars and trucks. This is the longest stretch of decline for this industry since 2009. This has impacted the economy in a great way. The annual GDP growth rate is estimated to be 0.7% (according to the Commerce Department). By excluding the auto sector from this calculation, the GDP growth rate would have been 1.2%. Sales for Ford fell more than 7%, and stocks in companies such as General Motors and Ford have also dropped by 2.9% and 4.3% respectively.


Adam Silverleib, the vice president of Silko Honda, claims that, “The market is tapped out, it’s no longer expanding at the rate the manufacturers thought it would”. This is not just bad for the GDP of the United States, but also for the job market. Due to this decrease in demand for cars, production has decreased, thus leading to layoffs. 1,100 workers at a General Motors plant in Michigan are being laid off this month. Although 700 of them are expected to return by the end of the year, this plant is not the only one that is eliminating shifts. More than 3,000 workers are out of a job until at least the end of the year due to this decline in the auto industry.

If the Federal Reserve raises interest rates later in the year as they intend to do, the industry would be even more hindered. This increases competition between companies in the sense that rival companies will be watching one another to see if one will cut their prices in order to take business from the others.

President Trump promised more jobs, but the recent decline in the auto industry may prohibit this.

– Katie Piro


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