After a decade of solid growth, automakers the world over are preparing themselves for a long-term slowdown. It’s a slow decline in auto sales that many experts predict won’t abate anytime soon.
To be clear, this is a problem that is affecting every automaker in every developed, industrialized country. More than 38,000 prospective auto industry employee layoffs have been announced within the first six months of 2019.
Bank of America and Merrill Lynch recently published an in-depth report on the issue. John Murphy, an analyst for report, said, “The industry is right now staring down the barrel of what we think is going to be a significant downturn.”
Adam Jonas, a financial analyst for Morgan Stanley, agrees. “Auto companies globally are contemplating life where global production has greater downside risk than upside.”
The current, and future, job losses affects automaker employees in multiple countries, including the United States, Canada, China, Germany, the U.K, Japan and others. These also happen to be countries with larger aging populations.
Moreover, these job losses will not just affect blue collar workers on the factory lines. Thousands of upper managerial and white-collar jobs are on the chopping block as well.
General Motors will lay off more than 14,000 people. The automaker will also close several factories throughout North America.
Ford is slated to axe about 12,000 jobs globally. More than 10% of Ford’s white-collar workforce will also be laid off.
Some auto industry analysts believe that the world has already passed the “peak car,” phase of industrialization. In other words, the demand for automobiles has passed its peak demand and will probably decline incrementally for the foreseeable future.
The world’s demand for cars is predicted to decline by about 3% in 2019. Additionally, about 0.2% has been already been pared from the GDP of the world’s economy due to decreased demand.
There is no one reason for peak car. It is happening for a variety of reasons. For example, electric cars are taking market share from traditional combustion engines.
But there’s also the convenience of ridesharing, the movement toward cities and mass transit by younger workers, and the natural falloff in demand as older buyers stop renewing their cars as frequently as before.