The global recession experienced with Automotive Industries is likely to continue.

Mark Wood

Globally, automotive industries have experienced a drop in car sell in the year 2019. Therefore, most companies have undergone a recession since sales have flopped. Consequently, the situation is likely to remain constant in 2020. Major environmental concerns have been attributed to some car companies like Volkswagen having a higher diesel emission menace. The major buyers like India and China have dropped by 4 percent displaying red light to the automotive industries.

LMC Automotive analysts stated that the number of cars sold in 2019 in the global car market dropped to 90.3 million, a decrease from 2018 which tabulated as 94.4 million. Likewise, in 2017, the global car sale was 95.2 million. The data presents a major global car sale drop over the past years. Most automotive companies have resolved in a forgoing combustion engine that generates a high diesel emission to a zero-emission engine that is electrical.

Other experts have speculated that the globe has attained peak car, a point in which the demand for the car is highest and slowly begins to deteriorate. Additionally, the recession in the automotive industries will result in an economic crisis since automotive industries are the second largest user of steel. Monitory Fund data places the car industry at a 5.7 percent economic output and accounts for 8 percent exportation.

On the other hand, China experienced the largest drop in sales for carmakers due to a steep decline in economic growth and administration of tax incentives to electric cars resulted in a drop in demand. LMC noted that the drop encountered was about 2.3 million from the cars sold in 2018. The huge blow for carmakers in China is almost impossible to recover due to climate change demand and shift to electric cars.

Carmakers had also invested majorly in India as it had demonstrated a good investment ground. However, due to credit crunch and a deteriorating economy, the car sales dropped and major losses were incurred in automotive industries. Also, Europe experienced tough conditions mostly with Volkswagen and Brexit diesel emission menace. Thus, potential customers were scared off as it was a threat to the environment. 

Although the society demand and perception of electric cars have risen, the cost of production has proved a challenge to the automotive industries. Additionally, electric vehicles require lower labor in assembly hence will call for retrenchment of other workers. IMF stated that carmakers are encountering challenges hence the need to create business changes in their models above than what technical reconfiguration requires should be considered.