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High Unemployment Lowering Auto Sales by Millions

Survey finds worried consumers delaying car purchases.

by on Aug.01, 2011

Car sales have been slammed by high unemployment, and the prospect is particularly poor for pickups and other large vehicles.

The ongoing economic crisis is having an impact on just about everything you can imagine, from restaurant sales to new car purchases.  Indeed, a new study claims that there could be as much as 1.5 million fewer cars sold this year due to nagging unemployment.

The 2011 Automotive Outlook, by Detroit-based AlixPartners, projects that just 12.7 million cars, trucks and crossovers will be sold this year, well below earlier industry forecasts that had pressed well above the 13 million mark.  Though the study expects sales to reach 13.6 million next year, that’s still well below the industry’s peak, which nipped the 17-million mark a decade ago.

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“The good news,” said John Hoffecker, a managing director at AlixPartners, “is that most of the U.S. players now have their costs in line to capitalize on a slow, steady sales recovery.

At the same time, he warned, sluggish sales pose a financial strain on an industry “facing some truly momentous, and monumentally expensive decisions on everything from powertrain choices to emerging markets.  The problem, added Hoffecker, is that, “Technologically, the auto industry could well be on the cusp of its biggest set of changes since the invention of the internal-combustion engine more than 100 years ago”