It is a tough time in the car business. We are seeing things mounting against all those involved in the industry.

This is a major indication of the overall economy. The automobile sector can provide a lot to GDP.

Unfortunately, it appears this is going to be one of the leaders bringing the United States into the recession.

The numbers across the board are awful.

First Half Decline

Passing the midway point for 2022, we see a consecutive run of lower months on a Year-over-Year basis.

The above chart clearly shows the trend.

Here is how the numbers stack up:

As we can see, on a Year-over-Year basis, the month of June was a 12% drop compared to a year ago. The situation gets worse when we look at the first 6 months of 2022 against 2021: a 17.9% drop.

The Top 10 selling models tell a similar story:

We are looking at a decline of 1.5 million automobile sales in the first half of 2022. We are on pace for a 13.6 million.

If we maintain this pace for the second half of the year, we will have the worst year since coming out of the Great Financial Crisis in 2011.

It is also clear how far we fell from the totals in 2015-2019.

Another fact that stands out, we are not even back to the pre-COVID levels.

Supply Chain Issues Or Something Else?

Most of the manufacturers are complaining about supply chain issues. This certainly is going to have some impact. Even Elon Musk is alluding to it although Tesla is weathering it fairly well. One key difference is, the main issue is with chips and EVs use a lot more semiconductors as compared to ICE vehicles.

Either way, we are seeing some hindering of production.

The question is whether we are also seeing a demand issue. Many feel that demand destruction is taking place within the economy. Obviously, with interest rates shooting up, this is making financing more expensive.

Consumers might also be leery to take on large debt as the economy is very questionable at this point. Households might be trying to keep their balance sheet tight in case of job disruption.

Of course, if people are shying away from large purchases, this is going to impact the economy across the board. The natural evolution is for those companies that are suffering declines in revenues to start laying people off. This ends up creating a downward spiral as things accelerate.

Having a decline in the automotive sector off an very poor year in 2021 is very telling. As other parts of the economy start to see headwinds, this is going to have a major impact upon everything.

It is also another reason why we can conclude the Fed is on the wrong path. Demand is likely waning in many areas and their actions are only going to causes a deeper drop than needed.

We can take a soft landing off the table. The automobile sector is going to have to stage a stunning rebound in the second half to even make the numbers look decent.

Whatever the issues, they are not likely to clear up anytime soon.

If you found this article informative, please give an upvote and rehive.

gif by @doze

logo by @st8z

Posted Using LeoFinance Beta