This paper considers the role of the automobile industry in the current cycle. It shows that the industry is economically important and its cycle is intertwined with business cycles. After casting some light on the sources of the collapse in car sales at the start of the crisis, the policy measures, in particular car scrapping programmes, put in place to support the automobile industry are discussed. The paper also derives short and medium term projections of car sales. While a rebound in car sales is likely in North America, Japan and the United Kingdom, car sales in Germany have been pushed significantly above trend and may weaken going forward. Over the medium term, in mature markets such as Europe and North America, trend sales are likely to remain stagnant. By contrast, rapid increases are foreseen in China and to a lesser extent in India.The report is a useful resource for students studying the consequences of the current international recession, or simply how economic cycles generally harm important industries.
Monday, March 01, 2010
The Global Automotive Industry in the Recession
Much has been made of the decline of Detroit's "Big 3" car companies. However, the current global recession has also hurt the automotive industry in several other advanced economies as well. The OECD recently published a report looking at these challenges, found here (PDF). From the report's abstract:
Posted by Matt H. at 8:10 AM