THE CAR INDUSTRY ON A WORLD SCALE IS GOING THROUGH A REAL CRISIS. THIS IS NOT registration of new cars. This ranged from a modest 8 per cent in France to an astronomical 31 per cent in West Germany.
This led to a big fall in profits and a serious dechne in production; a reduction in employment must inevitably follow.
The fall in profits has been sensational. The giant General Motors profits dipped by an alarming 85 per cent compared to the first quarter of 1973, whilst British Leyland and Citroen are both tottering on the edge of bankruptcy. SOME SIMPLE RECESSION, BUT A CLASSICAL CRISIS.
During the first quarter of 1974 in the major capitalist countries there was a serious decline in the use public transport.
For transport to and from work and for leisure trips such as weekends, parties, etc, there was a significant increase in the use of railroads, buses, subways, and other means of transit.
In past decades the private car was the number one means of transit in such cases. Statistics on 1974 vacations are not yet available. It is certain however that the use of private cars has been on the decline, at least that will be greater than the general reduction in production, real income and employment. in countries like the United States, Japan, West Germany, and Britain has extended beyond the oil crisis", it is obviously because of the effects of the recession (whether real or anticipated soon).
hit by the recession, like Australia and Brazil, are not yet experiencing the car champ, although the oil crisis' affects them as much as it does any other countries, The measures taken to restrict credit in order to 'slow down' inflation (nobody talks about "stopping" it any morel) have contributed to reducing car sales in that these measures have made credit for consumption more expensive, or have been qualitatively reduced it. The effects of these rucasures on the demand for cars have been especially disastrous in Britain.
viously not predictable. It is thus dif ficult to formulate predictions about the possibility of a short-term change in the car market. What is certain is while those of the big gas-cuters hither. that the economic situation is wors ening in Western Europe, especially in West Germany and France, where the recession is tending to define itself more clearly, as well as in the United States and Japan.
Few experts contest the fact that If the car slump Countries that have not yet been The duration of the recession is obJust the opposite, nearly all trusts have responded to the decline in sales and profits by incrcasing the unit sales price of their cars. Only a real tech nological revolution in the industry slack. reducing the cost of production on the order of 30 or 50 percent, could Jead one or another trust to institute such a price decrease in order to radically increase its share of the market.
As for the real incomes of households, inflation and recession tend to reduce them or hold them stagnant, not to increase them. After the econ omic upturn that will follow the current reccasion, inflation will continue to be exacerbated. The increase in the real income of workers' houscholds will therefore be quite modest, it it occurs at all, which is not certain Under these conditions, a new rapid expansion in car sales is very japrobable in capitalist Europe and Japan.
Nor is it likely to occur in the US, where in the past decade high car sales have bolstered the tendency to want to acquire a second car. It b only countries like Australia and Canada that could experience a more rapid expansion for another few years, until motorisation attains a saturation point comparable to that reached in begun. most of the big imperialist countries have diminished, the 'national" trusts of each of these countries have sought to increase their exports to take up the On the internal US market, imports of European and Japanese autos have declined almost in the same proportion as total sales of cars. Foreign competitors have thus not succeeded in increasing their share of the North American market, particutarly because of the massive production of American small cars and the revaluation of the Deutschemark. The Ford Pinto has become a better bargain than the Volks wagen in the United States.
In a general way, the West German car industry, which is the biggest exporter in the world industry, seems to be hardest hit (especially in terms of the increases in the price of its expor lapan is just on the heels of West Germany. In 1973 West Germany exported 2,35 million cars and tricks, as against 2.1 million for Japan, 1.6 million for France, 1.5 million for Can ada, 750,000 for Britain and 705,000 for Italy. In 1974 German exports are declining, while Japanese exports rose 20% during the first quartes.
The French and Italian industry realised modest export gains at the beginning of 1974, doe mainly to the effects of the devaluation of their currencies relative to those of a series of other European capitalist countries and the Us dollar. But it is not certain that the French and Italian firms will be able to preserve these gains if the recession deepens in most of the countries where it has already Keduced production and profits