LIMA — Consumer preference for higher-cost vehicles could help the automotive industry withstand an anticipated downturn, according to Bernard Swiecki, director of the Center for Automotive Research’s automotive communities partnership.
CAR is forecasting a mild slump in the automotive industry between now and 2021.
The number of vehicles sold in the U.S. peaked at 17.5 million units in 2016. That number is expected to fall to 16.8 million in 2019, but CAR’s projections for the next several years show only a modest decrease in unit sales compared to previous downturns.
And Swiecki, who spoke during Lima’s annual Auto Growth Summit held at Rhodes State College on Friday, said the popularity of cross-over utility vehicles — a big money-maker for automakers — is a positive trend as the industry prepares for a possible recession.
“If this is what the downturn is going to look like, we will take it,” he said.
Is a recession imminent?
Past indicators of an economic downturn suggest that may be the case. The yield curve on long- and short-term bonds has inverted, productivity in the automotive industry is slowing and, according to Swiecki, suppliers are cutting jobs for the first time since 2009.
That doesn’t necessarily mean a repeat of the Great Recession is likely. But Swiecki said mishandling of trade — with a new deal between the U.S., Mexico and Canada under consideration and the continuing concern of tariffs — could be what pushes the U.S. into the next recession.
“In the past we’ve had either tech bubbles or housing bubbles that exacerbated whatever weak fundamentals there were in the economy. … Right now (trade is) the only thing on the horizon that could have that bubble effect,” he said.
Swiecki explained that tariffs on Chinese imports have only led to an increase in imports from other countries, rather than creating U.S. jobs as intended.
“If we stopped it from coming in from China and made it here, that’d be one thing,” he said. “But we stopped it from coming in from China and now it’s just coming in from Mexico is a pretty common story with these things.”
Reach Mackenzi Klemann at 567-242-0456.