Car sales are declining worldwide, and why innovation matters

 

Photo: A Honda passenger car (Wikipedia) Honda Motors and General Motors have announced the closure of ther respective plants in Southeast Asia

There is a lot being said about the closure of the Honda auto plant in Laguna in the Philippines and the GM auto plant in Thailand, about its so called " political significance" and how it "reflects" on their host governments. 

What is not being heard are the facts which include the reality that sales of Honda cars have been slumping for years according to industry sources. In the Philippines it is clear who is the runaway winner in motor vehicle sales, and it is the brand most taxis are made of and which has opened two new showrooms in the region over the last two years. It is almost half of all new vehicles. And yes, it is not Honda. 
 
Likewise, the global preference for mass transit systems over private car ownership is apparent, due to its lower contribution to carbon emissions and highway traffic. 
 
The recent drop in nitrous oxide emissions in certain Chinese cities show the impact of reduced vehicular use on the environment. 
 
Moreover, the decision of certain governments in Europe to make public transport free is weighing down on motor vehicle manufacturers. The time will some when a majority of people ride public transport compared to private vehicles.
 
It is therefore not surprising that global auto sales are slumping. In an article by Neil Winton in Forbes, 2020 will see global car sales slump due to a variety of factors with the industry tightening their marings amid tough competition (https://www.forbes.com/sites/neilwinton/2019/12/05/global-auto-sales-will-slide-again-in-2020-but-china-rally-begins/#b328fd53fed6). He cites S&P Global Ratings saying that global sales will show no revenue growth in 2020, and 2021.
 
With the effects of the US China trade war already affecting sales further, the the NCOV scare slowing down factory output, the outlook for the industry is not rosy. We will expect further declines in global auto production, prpmting many companies to consolidate operations where the costs are lower in order to keep already thin margins from getting any thinner. 
 
With these industry realities, we cannot and should not expect governments to use taxpayer money in bailing out companies, mostly foreign, that are no longer competitive. They will just have to sink or swim as the adage goes, and go with the flow of market conditions as change will be needed for them to adapt to these new conditions. Such crises create opportunities for growth.
 
In the end, economies and industries change and transform as they always have. Cybercompanies like netscape and myspace were common ten years ago, but are unheard of today. 
 
The same will go with some autobrands. Unless they are able to go with the flow and harness technology, upgrade production efficiencies and meet the demands of new markets, they will be obsolete. other companies will fill the gaps left by competitors who fail. The name of the game is adaptation and innovation. Its currency will be speed, or the rate with which they will adapt to new realities.
 
In the process of making these transitions, some opt to close down plants and move their operations to other areas to consolidate and adapt.