The Credit Crunch and The Car Industry..

Oil prices and banking mistakes have hit the global economy

The so called 'Credit Crunch' has hit pretty much the entire globe in 2008. Triggered by the sub-prime mortgage crisis in the US, and fueled by soaring oil prices, almost every industry has been hit. Costs are rising for companies, especially manufacturing which is using alot of energy and fuel which rocketed in price, This causes cost push inflation and prices of things like cars will rise, and revenues fall. This coupled with a plumet of consumer confidence and people worried about their finances, has lead to virtually no-one buying a car. The worst hit is the mid - high range car indusrty.

With very low sales, prices have plumeted and dealers cut orders and factories have to close down, more jobs are lost and the problem is yet further escalated. Most people will be looking to spend as little money as possible on a car, and for the average person, this means that alot of the cheaper (often japanese) imported cars will seem more appealing, and our native car companies and the larger major manufacturers will loose yet more sales.

However more recently oil and petrol prices have been falling and consumer confidence appears to be rising slightly, so there may be light at the end of this very dark tunnel. The major companies appear to be built on solid foundations and none have been forced to shut down, whilst banks and high street retailers have been dropping like flies. In the US, General Motors and Chrysler have recieved bail out money from the government. $13.4 billion between the two was given to help pay off debts, $9.4 billion to General Motors and $4 billion to Chrysler.

Chrysler and General Motors are both Struggling in the US

Naturally all companies are cutting back on costs, laying of workers and cutting back on research and development, as well as cutting prices so people will buy from them. So if you are in a safe financial position now is the time to buy a car. Some companies have gone out of there way to make cars used rather than new, lower the price by thousands! They use brand new factory cars as a company car for a month, the result: a virtually brand new car with a few hundred miles on the clock with a massively reduced price! bargain.

In conclusion, the car industry is in shock from the economic problems as people cut back on spending but as long as governments continue to help them out, and consumers start spending again, the car industry will recover, as a car is an essential part of modern life which people often cannot function without.