TUNE UP - Auto Industry Boom?

"After a boom year, what’s down the road for the auto industry?" PBS NewsHour 1/6/2016

On a personal note; after I paid off my mortgage in March 2015, I replaced my 1999 Ford Mustang V6 with a new 2016 Ford Mustang V6 (manual transmission).

Excerpt

SUMMARY:  In 2015, Americans spent roughly $570 billion dollars on more than 17 million cars and trucks, breaking a record set 15 years earlier.  But it was also a year of automaker scandal, including a probe into GM's defective ignition switch problems, faulty airbags found in more than 19 million vehicles and Volkswagen's emissions cheating.  Judy Woodruff talks with David Shepardson of Reuters.

JUDY WOODRUFF (NewsHour):  2015 turned out to be a boom year for the auto industry, despite some of the worst news about its practices in recent years.

Americans spent roughly $570 billion on 17.5 million cars and trucks last year, an almost 6 percent increase over the prior year, and breaking a record set 15 years earlier.

But, in the same 12 months, GM faced public congressional hearings and paid a $900 million settlement over its handling of a defective ignition switch.  U.S. regulators recalled more than 19 million vehicles over faulty air bags, and Volkswagen admitted to rigging diesel cars to pass emissions tests.

Some insight into this from David Shepardson of Reuters news service.  He covers the automotive industry, as well as other regulatory matters.

And welcome back to the program.

DAVID SHEPARDSON, Reuters:  Thanks, Judy.

JUDY WOODRUFF:  So, Dave, should we be surprise at this jump in auto sales last year?

DAVID SHEPARDSON:  No, I think it’s continuing a record-setting six-year trend, really the longest increase in auto sales since the 1920s.

But it says Americans, our cars in the garages are still pretty old, a record 11.5 years on average.  And there’s been a lot of pent-up demand.  Plus, you have got low gas prices, low interest rates, and a lot of good deals on — in showrooms.  And Americans are feeling more confident.  Unemployment has declined.  So, really, all the economic indicators that would help boost sales have been in the auto companies’ favor.

JUDY WOODRUFF:  And I want to ask you about some of those factors.

But this happened, as we just reported, despite all this bad news about the industry.  What does that say about consumers?

DAVID SHEPARDSON:  It’s pretty remarkable that consumers have shrugged off all the bad news.  And, really, it’s hard to keep it straight, from the air bags, to the fines to companies for not disclosing defects and handling recalls properly, not to mention Volkswagen, Takata and General Motors.

So, consumers have been able to separate some of those issues, especially because they’re older vehicles not in the showrooms, in part they need cars and trucks, and they’re not going to sort of wait for the industry to get all its practices back in a row.