The sale of cars in the United States plunge

The financial crisis in the United States has not only effected banks and stock markets, but also the car industries. Since many American citizens fear that they will be affected by the financial crisis the number of buyers for cars reduced. Customers are not sure if their income will decline in the future and therefore, they do not want to take any risks.
This year Toyota’s sales in the United States decreased 32%, Nissan’s sales decreased 24% and Ford’s sales even dropped to 35%. For all three companies this decrease of demand first began with the high prices of gasoline. Customers did not want to pay the high petrol prices and therefore stopped buying trucks and pickups and changed to more fuel efficient car models. However, now the car industries have been affected by the financial crisis. Customers are now being more careful when spending their money, as they fear that the financial crisis could affect their incomes. Instead of buying cars immediately, the customers decide to wait and see how the finances would improve in the future.
964,873 vehicles have not been sold in the last year, which makes a decline of 27% of all industrial companies’ sales. The demand for trucks decreased 31% and the demand for cars dropped 22%. This does not only give the company a lack in income, but also a surplus of cars. As the cars are not being sold, the companies are losing money just by making all the cars.


As can be seen on the graph above the demand has dramatically decreased during the last year. As demand decreased people are not able or not willing to pay such a high amount of money for a car. Prices also decreased with the demand. However, the supply of new car models stayed the same. This gives a great amount of surplus for the company and also a budget problem. The companies are making great losses with the surplus because they are making more cars that can be sold. To stop the surplus from increasing the company would have to try and move its demand curve again or control the production of cars. Many car companies fear that the financial crisis would decrease their income even more. To change this, the car companies will have to adjust to the new financial conditions in the United States. Until that point the car companies can only hope that the financial crisis will not affect its selling’s in Europe.