The Sky Is Falling! The Sky Is Falling!

Are we heading for an auto industry disaster or are we simply being led to the fox’s den? Guest writer, MAC, finds the facts amongst the folly.

Above is a picture of some of the world’s unsold cars inventory; they are piling up around the world in a catastrophic building of inventory that threatens to undermine the very fabric of modern day living! Or so Chicken Little would have us believe. In the past few days, there have been some pretty alarmist photographs circulating around the internet detailing huge inventories of unsold brand new cars gathering dust and sea spray as they sit neglected at docks, on airfields and on test tracks around the world. The following pictures are all time-stamped with May 2014 so I assume that they are current photographs…

A picture of Sheerness, UK; this is not the employee car park but the new car storage area:

This is Honda Swindon; didn’t we just write about them?:

This is the Nissan test track near Sunderland in the UK:

Below is an airfield allegedly in Russia which is now choked with unsold new cars:

Our office was all abuzz as the wave of pessimism reported to us via an email made its way around our office. We stared at our screens incredulously as picture after picture of parking lots brimming with unsold cars illuminated our computer screens. Why would car manufacturers act so irresponsibly and continue to manufacture billions of dollars’ worth of cars just to have them rot at the dockside. Why didn’t they scale down production to match demand? The first of the many articles that I read on the subject even had an explanation for the disappearance of the cars from the Nissan test track a few days later, stating that: 

'Currently May 16th, 2014, all of these cars at the Nissan Sunderland test track have disappeared? Now I don't believe they have all suddenly been sold. I would guess they may have been taken away and recycled to make room for the next vast production run.'

The visuals are strong and for the pessimists out there, the thought of world automakers blindly manufacturing cars that they are unable to sell and then dumping them around the world in every perceivable nook and cranny in an endless cycle of production hysteria may be appealing as so much of recent economic behavior seems senseless. Thus, articles of this nature seem to make sense. But hang on. Wait a minute. Didn’t I just write two articles about increase in sales in Europe and higher profits for the automakers in Japan. Good news on the flourishing health of the auto industry are everywhere at present, so where did these articles come from?

Well, thankfully, I can tell you that all the stories currently circulating are, to put it bluntly:

The original article was written by Nick Mead of The Guardian of London on 16 January 2009, and it is from here that the most recent rumour mill got started.  Now, if you cast your mind back to that period in our recent history, we were in the middle of the worst recession ever, when everything on credit got jammed up and there was economic carnage. Luckily for us, the world has now returned to prosperity, and business and trade is once again growing.

So I am happy to report that there is no basis for the gloom and doom. Reports circulating on the internet implying that another financial Armageddon is just around the corner are baseless and false. Oh, and by the way, the emperor has a new suit. 

images: theguardian.com, jalopnik.com, zerohedge.com