Category: Auto Industry

AAA says gasoline prices could fall 50 cents a gallon by spring. Forgive me for being skeptical.

After all, high gasoline prices haven’t altered consumer driving habits in the past. But AAA says what’s different now is worries about recession. The motor club says consumers are nervous about losing their jobs -- so they’re trying make fewer shopping trips. It says businesses are making fewer sales calls and short haul deliveries.

AAA is a reliable source. And I’m sure there are some businesses and consumers changing their driving patterns. But I can’t think of any in my neighborhood, off the top of my head.

It seems the inevitable has finally happened to the U.S. auto industry. Since the beginning of the decade, analysts have predicted year after year a decline in annual sales. And, year after year the companies were able to delay that fate. That is until now.

Analysts are still tallying the figures, but it looks like U.S. vehicle sales for 2007 will come in at around 16.1 million units. That is the lowest figure since 1998. Sales are expected to sink by another half-million units next year.

How were GM, Ford, and Chrysler able to delay the inevitable for so long? Incentives. Zero percent financing and rebates pulled people into showrooms even when they didn't need or couldn't afford a new car or truck. Now, after years of over-indulging on cheap credit and deals, many consumers are saying "No more. " Does this remind you of the housing industry?