Gas Prices Fuel Automotive Industry Downturn: State of the Industry Report

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The automotive industry hit an all-time low this week, according to auto sales analyses. Auto companies reported a dramatic decrease in sales, the lowest level in 16 years. Annual auto sales were down to 16.1 million last year, as compared to 17 million in 2005. The automotive industry hasn't seen a double-digit decline like this in quite a while and sales are expected to decrease another 10% this year.

Auto companies are blaming the high cost of gas and the lack of fuel-efficient vehicles available to the public. They say that gas prices are not likely to go down very much and auto sales will continue to drop. People are buying more hybrids, crossovers, and smaller models. Auto sales have been decreasing for seven months, the longest drop in eight years. Some auto manufacturers are beginning to look at the production of fuel cells, as opposed to the fossil fuels in use now. A fuel cell is an electrochemical device that uses hydrogen and oxygen together to produce electricity, heat, and water. While there are several different types of fuel cells that have been invented, the automotive industry is trying to decide which one would be the most efficient and practical. Thousands of commuters are using the internet in order to arrange ride-share travel to and from work, as the gasoline prices reach $4.00 per gallon.

About 12% of vehicles on the road today are only getting 25 miles per gallon. Ford stated that it will increase the production of some of their more fuel-efficient models like the Ford Focus, Ford Escape, and Mercury Mariner. Ford was the first to report on Tuesday and stated that their share hit a 52-week low, and that the sales had fallen 28%, a huge leap from beginning of the year sales.



Even though General Motors beat Toyota in sales in June they still saw an 18.2% decline. Their shares dropped 6% and went to their lowest level on Monday. This was a drop that General Motors hasn’t seen since 1954.

Toyota passed General Motors in first-quarter global sales, which saw a growth in Europe and China. Toyota has taken over as the top auto manufacturer in the world, as their vehicles have always been designed for fuel efficiency. Toyota’s US sales fell 21.4 % for the year, 9.4% of that decreased experienced in June alone. Their truck sales went down to a low 38.8%.

At the 2008 Detroit Auto Show in January spectators were looking more at Hybrid models than anything else. Consumers are looking for advanced diesels and want greener alternatives and fuel efficiency. The highlight of the auto show was the Ford Escape America, which is much more cost-efficient than a hybrid because it is powered by an EcoBoost engine.

Even though automotive manufacturers around the world are trying to cope with high fuel costs, as seen at the auto show, people still want even more fuel-efficient and practical automobiles. Consumers are weary of high auto prices, as well as high gas prices, and have been spending decidedly less in the automotive industry.
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 manufacturing  Toyota  automobiles  Europe  General Motors  gasoline prices  industry  consumers


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