How the Ailing US Economy is Affecting Its Automobile Manufacturers | Automobile

The health of the US economy is directly proportional to the health of the automobile industry and the well being of the automobile manufacturers. The automobile manufacturing industry happens to be the country’s largest manufacturing base. Approximately 4% of the GDP of U.S.A comes from the automobile manufacturers. According to recent reports by the alliance of automobile manufacturers, out of every 10 U.S. jobs, or about 13 million, is auto-related, and auto workers receive $335 billion annually in compensation.The clouds of the economic crisis engulfed the automobile manufacturers in September 2008 when the auto industry reported a loss of $9 billions in US sales as compared to the sales in September 2007. The industry fears further losses in the coming months if the situation prevails.The economic turmoil is affecting auto consumers and communities in a chain reaction and every sector seems to be connected to one another in this crisis. As the demand nose dives, automobile manufacturers are forced to cut down on supply, which further results in less work for assembly-line workers. Fewer parts are needed from the suppliers which are the ancillary industries and workers buy less and less which results in the lack of demand for consumer goods. This eventually forms a vicious cycle engulfing the entire consumer economy. Automobile manufacturers can thus make or break the US economy.Here are some facts and figures that bring the real picture to us:o An ailing auto industry can really hurt the financial sector further as more than 90% of the new vehicles are purchased on credit.o Major purchases like automobiles really matter for the economy.o Reports have confirmed the fact that consumers are finding it more and more difficult to get loans for automobiles.o Rising delinquencies in auto loans are hurting the automobile manufacturers further.o About 1000 dealers closed their businesses closed their businesses, in September 2008 and more are on the way (CNW).o Autos sales contribute more than $10 billion dollars of annual tax revenue every year. A drop in auto sales invariably hurts state budgets too.o By the end the 3rd quarter, almost 100,000 automotive jobs were reportedly cut.The recession is a stark reality for the automobile manufacturers however they have not lost their optimism. They have supported the 2007 Energy Bill, which requires a 40% increase in fuel economy by 2020. The automobile manufacturers have now joined hands to develop and introduce more fuel-efficient technology.
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