U.S. auto sales

I've seen buzz about slowing auto sales off and on again the past quarter and then there is this one.
Source: Why are U.S. auto sales suddenly slipping into reverse? - CBS News

When news leaked out Tuesday that Ford Motor (F) would cut 10 percent of its salaried workers, it underscored how the auto industry's strong sales are slipping after years of consecutive growth since the Great Recession.

In April, the industry reported a 4.7 percent sales drop, according to industry tracker Autodata. General Motors (GM), Fiat Chrysler (FCAU) and Ford showed declines of 7 percent or more in sales. Japanese car companies also were off in the North American market, although not as much.

As vehicle demand has ebbed, automakers find themselves dealing with bloated inventories. At the end of April, GM had enough vehicles to last 100 days, with 60 days the ideal level.

The lower sales affect both sedans and high-margin SUVs and trucks, which have been benefiting from lower gasoline costs. The most sluggish lines are small and midsize cars, which larger vehicles overshadow.
. . .​

Ford did not go bankrupt in 2008 as they'd figured out what was happening and cut back early. Assuming Ford is still using the same technique, laying off 10% of their white collar workers does not bode well. There are ripples, not from just these layoffs but an order of magnitude more, unannounced.

The suppliers to the auto industry make glass, tires, sheet metal, wiring harnesses, and a host of parts that go into those cars. When the car manufacturers slow down, it ripples throughout the suppliers. Then there is the problem of auto loans:

During the first quarter, however, gross domestic product turned in its weakest growth in three years at a 0.7 percent annual pace, as consumer spending barely rose and companies spent less on inventories.
. . .
Low interest rates led to more available credit for auto buyers. One aspect was an explosion in long-term loans, to six years or so. That's a long time to be committed to a vehicle, and consumers end up paying more over time in interest.
. . .
As a result, car loan delinquencies (90 days or more past due) have climbed to their highest levels since 2008. The upshot is that many lenders are reexamining their lending policies, which could bring a credit contraction. . . .​

So the problem with long auto loans is they easily exceed the manufacturer warranty. So in the latter half of that loan any repair (i.e., tires, battery, windshield wiper) or maintenance cost has to compete with the monthly payment ... and it is an old car, not the latest hotness. Then the loan defaults and the bank repossess a well worn car probably suffering from inadequate maintenance and missing repairs.

Bob Wilson