Experts Predict 2016 to Be a Year of Automotive Recession

Source: Scott Olson/Getty Images News

Scott Olson/Getty Images News

report by Automotive News shows that 2015 was the best year for new car sales America has ever experienced, crushing all expectations with sales numbers that topped upward of 17,470,659 units all together. That is an increase of about 5.7% over 2014, and trumps the previous record-holding year of 2000, which saw 17,402,486 new cars leave dealerships.

According to the report, the largest winner of 2015 was Nissan, which saw a 19% jump over the same time in 2014. The Fiat Chrysler Group (FCA) saw the next biggest hike, with a 13% bump, and while volume rose 11% for Toyota and 10% for Honda, Ford and General Motors came in last with deliveries up 8.3% and 5.7% respectively.

Lower gas prices, a boost in lease program interest from consumers, low APR offers, and a rekindled love for all things truck-oriented have been attributed to America’s surging car sales, and according to Automotive News, these final numbers from 2015 “marks the longest streak of annual gains since the 1920s and caps a spectacular comeback for the industry.”

Analyst Jessica Caldwell of Edmunds.com says that while of the aforementioned factors do indeed influence potential car buyers, it is important to not overlook the vehicles themselves. “If you’re buying a new car today,” she explained to Automotive News, “you’re getting a safer, more fuel-efficient, and more technologically packed vehicle than ever before.”

But regardless of how right-on Caldwell is, or how fantastic of a year it was for the auto industry as a whole, it is highly unlikely that 2016 will yield the same extreme numbers. In fact, 2016 may end up being one of the worst years for car sales in history, and at the risk of sounding like naysayers prognosticating the impending doom of the automotive segment, there are a few reasons that have caused industry experts to act apprehensive about the Year of the Monkey.

YOSHIKAZU TSUNO/AFP/Getty Images

Yoshikazu Tsuno/AFP/Getty Images

Bloomberg highlights a grim reality that no one wants to see in a new piece. In the video, JSC Automotive’s managing director Jochen Siebert explains that while sales will remain up for the immediate future in the States, a period of stagnation followed by a sharp decline could be upon us with more foreboding implementations to follow.

Praised for its consultative skill sets, JSC Automotive specializes in analyzing all things automotive for the Chinese market, and offers council to both suppliers and OEMs in areas such as strategy, planning, and marketing, as well as for mergers and acquisitions. Founded by Jochen Siebert back in 2007, the firm has been following auto sales trends the world over, and since globalization has caused a “we’re all in this together” level of reliability, predicting what happens over in places like China will undoubtedly correlate to the rest of the world as well.

Remotely located in Singapore (JSC Automotive is headquartered in Stuttgart and Shanghai), Siebert explains that even though America kicked ass in 2015 when it came to fresh automobiles in garages, the rest of the world was not so fortunate. He tells Bloomberg that when regarding auto sales in 2016 “the term that we will use is ‘global recession.'” He goes on to explain that sales in America will likely not grow higher than 17.8 million since the demand has primarily been met, and mentions that the culprit that will most likely pull everyone down is “former emerging markets [that] are submerging.”

Brazil, Russia, and China are all prominent markets that automakers have been vying for power in recently, and now that they all seem to be stalling, Siebert and his team of analysts predict that the worst is yet to come. When asked if China holds the car keys to salvation or damnation, Siebert says that the U.S still retains that ownership along with Japan and some “other markets,” and that if interest rates rise like many have predicted they will in 2016, sales will fall off once more. He goes on to mention that government and personal lawsuits stemming from the Volkswagen fiasco will also likely damage growth, and with diesel sadly slipping back into context as a dirty word, sales of this fuel efficient style of combustion will likely slide even further.

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