Automotive Production Experiences Its Most Significant Decline in a Decade
As manufacturing in general suffers a decline at the beginning of 2019, the automotive industry is hit especially hard by this downturn
Photo: GM
For months, automotive analysts have been predicting a downturn in new car sales during 2019. New numbers out of the Federal Reserve might be hinting at a slowing down of not only sales, but production as well.
According to the Federal Reserve, automotive production just experienced its most significant decline in a decade.
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Production of motor vehicles and related parts fell 8.8 percent in January. This represents the steepest decline in automotive production since May of 2009.
Back then, the country was still feeling the effects of the recession. As such, a production decline of this magnitude does not bode well for the automotive industry.
Car production isn’t the only sector to be affected by these declines. Manufacturing in general declined 0.9 percent in January, the largest drop in eight months.
This is in stark contrast to what economists were predicting. Instead, a 0.1 percent increase in manufacturing output was predicted for January.
Industrial output also fell by 0.6 percent. This was the first month of declining industrial production since May of 2018.
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These production declines arrive prior to many factories and plants in the U.S. eliminating shifts or idling production in order to deal with a surplus of sedans. As customers flock to pickup trucks and SUVs instead, automakers are trying to decide how best to respond to these changing consumer tastes.
January may be something of a fluke for any number of reasons, and production could start to climb back up again in February. However, these drastic production losses for the automotive sector could be a sign of yet more struggles to come.
News Source: Reuters
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