Unemployment in the U.S. and government measures to cool China’s economy are damping demand in the world’s two largest car markets, weakening the outlook for the industr
U.S. auto sales in August were the worst for the month in 28 years, while China’s passenger-car deliveries to dealerships increased at the slowest pace in July since March 2009.
Sales are faltering after governments withdrew stimulus measures that propped up sales in the U.S., China, Europe and Japan. The bleaker prognosis for sales may also hurt profitability as automakers including Toyota Motor Corp., General Motors Co. and Volkswagen AG are forced to offer higher incentives to lure customers.
“The U.S. economy is looking downward, with high unemployment, mounting bankruptcies and other indicators that don’t paint a pretty picture,” said Yuuki Sakurai, chief executive officer of Fukoku Capital Management Inc. in Tokyo. “In China, the government is putting on the brakes so that the overall economy won’t overheat.”
At Toyota, the world’s largest carmaker, Japan-based dealers began offering incentives for the nation’s best-selling Prius hybrid even before government subsidies of up to 250,000 yen ($3,000) ended on Sept. 8. Christian Klinger, sales chief at Wolfsburg, Germany-based VW, said last month that the operating environment is becoming more difficult.
“Now that incentive programs have come to an end, the global automotive market is expected to decline in the second half,” Klinger said in an e-mailed statement on Aug. 13.
