ACME, Mich. — Automakers and suppliers will confront a squeeze on profits and vehicle sales, according to a panel today at the annual Management Briefing Seminars.
“Market momentum is negative,” said Jeff Schuster, president, Americas operations and global vehicle forecasts for LMC Automotive.
“The level of uncertainty is high,” he added. “A lot of decisions are being put on hold.”
U.S. deliveries of cars and light trucks are slowing after four consecutive years of 17 million or more. First-half U.S. vehicle sales declined by 2.4 percent, according to Automotive News. That’s on pace for full-year sales of about 16.9 million, according to the trade publication.
Vehicle deliveries have been propped up by sales to corporate buyers while sales to individual buyers are trailing off, said John Murphy, auto analyst with Bank of America Merrill Lynch.
“Demand is being held up by fleet,” Murphy said. “That (individual) consumer is going to get exhausted.”
Globally, the picture is much the same. “The European market isn’t going to be profitable soon,” Murphy said. The China market is still expanding but growth is softening.
Automakers and suppliers have more to watch than just sales.
The Trump administration may levy tariffs on imported vehicles, which may drive down sales further. The industry also is developing self-driving and electric vehicles. But that investment likely won’t generate profit for years.
“We’re quite a ways from being profitable” with autonomous vehicles, said Stephanie Brinley, principal auto analyst for IHS Markit. Self-driving vehicles may not break into the black until around 2025, she said.
Forecasting when a downturn will hit is difficult, Schuster said.
“The signals are not right in front of us,” he said. “It makes for a challenging environment.”