In a recent article published in Business Week, http://www.businessweek.com/bwdaily/dnflash/mar2005/nf20050321_4309_db084.htm, the author points out that with oil prices and interest rates rising, fast times for auto and SUV sales are ending. Has the cost of buying one of these machines overcome the benefit of having one? With the interest rates rising and the cost of gas rising as well, one can not afford to drive, let alone buy an SUV. The author also points out that the problems in the auto industry goes well beyond GM. As stated before, with interest rates rising and the price of oil sky-high, Americans may be nearing saturation, with much less incentive to buy new cars for now. The sales slowdown may result in a stunningly nasty crash.
The end of the so called auto bubble may create conditions for a new wave of inexpensive imports as domestic manufacturers weaken and consumers get even more price-conscious. GM's bad first quarter may signal a very rocky road ahead. What do you think? Will car manufacturers continue to decline in their sales and will we start buying cheaper foreign cars in replacement?