Posted By: Andrew Cho
Everyday, at every hour, on every news channel, the top stories revolve around the government's plan to revatalize the economy. For a second, there seems to be hope in the air, as economists and politicians seem optomistic about the proposed plan. Perhaps, this is the plan that will lift the country out of economic misery, and back into the good graces of capitalism. But as of yet, little has changed over the past months, and uncertainty about the future remains.
Perhaps the hardest hit the auto industry as it struggles to keep afloat despite government aid. New-vehicle sales in the United States fell 37 percent in January to one of the lowest levels in half a century. It was the industry’s worst month since June 1982, and the worst January since 1963. For the first time, more vehicles were sold in China last month than in the United States.
As tight credit markets continue to prevent some potential buyers from getting the vehicles they want, many auto makers expect continued losses in the near future. Since the auto industry is based heavily on credit, it is almost impossible to sell vehicles if customers are not being approved. It is not that consumers are no longer interested in buying cars, but that their credit lines prohibit them from doing so. With that said, it is clear that for any recovery plan to work, it must focus on this very fundamental issue.
Sources:
http://www.nytimes.com/2009/02/04/business/04auto.html?_r=1&scp=1&sq=auto&st=cse
http://www.nytimes.com/2008/11/19/business/worldbusiness/19chinaauto.html
http://usnews.rankingsandreviews.com/cars-trucks/Auto-Bailout/
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