The first six months of 2019 have been eventful with some key automotive industry trends and takeaways that will be useful for industry analysts and dealers alike to plan for the next half. Last year’s gradual sales slowdown gave rise to several speculations on how the sector would shape up this year. Although it’s too soon to make any conclusions, our automotive industry analysis shows that year-on-year sales depict a sluggish pattern. In this blog, experts at Infiniti Research examine the key factors that could have resulted in the dismal performance of the sector in the first half of this year and also some key takeaways based on these automotive industry trends that companies can use to revamp their strategies for the second half.
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Automotive industry trends and key takeaways
Tariff war with China
Since the last quarter of 2018, there has been a significant threat of high tariffs being imposed on Chinese goods. Many of these items are used in automobile productions. This news was a big blow to many branches of government as well as automakers in the US. Experts at Infiniti Research expect that increase in the tariffs on Chinese goods could significantly diminish the demand for new vehicles and hamper automotive industry sales. This hearsay about the rise in tariffs has also resulted in a slowdown in the automotive market in China, diminishing profits for western automotive companies doing business there.
The trade dispute with Mexico
Not just China, Mexico was also in danger of having tariffs levied on all imports. Mexico is a primary source of low-cost factory labor and materials to several automakers in the U.S. An increased tariff means that these automakers will lose out on much of their cost savings. Several companies in the automotive industry claimed that they could incur millions of dollars in losses if the tariffs came into effect. Fortunately, President Trump has decided to do away with the tariffs indefinitely. However, this issue can be expected to come up again anytime in the future.
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Booming used cars market
One of the prime reasons for the first half of 2019 to begin with a sluggish start can be attributed to the increasing competition in the used-vehicle market. This is one of the key automotive industry trends dominating the sector right now. The rising price of new cars and the increasing interest rates are prompting customers to purchase used vehicles. If the affordability of new cars continues to become a problem, automotive industry trends like booming used car sales will become prominent in the next couple of years.
Final thoughts
The first half of this year had a sluggish start for the automotive industry. Some automotive industry trends like increasing competition from the used vehicles market, weather-related events, and the federal government shutdown are some of the key factors contributing to the slowdown in the automotive industry. If all the above-mentioned automotive industry trends come into play in the second half as well, our industry experts expect this year to be even more challenging and crucial for automakers.
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