Peak cars?

Jam - Picture courtesy Bloomberg.com

You may not notice it in the U.S. , where auto sales are heading towards pre-carmageddon heights, but globally, automakers are slowing down. With the exception of the U.S., auto markets around the world have either cooled of, or are downright miserable. Global automakers are adjusting their plans.

Looking at the world markets, the slump is likely to continue: South America is very weak. Europe’s recovery is anemic. Japan is heading down. In China, restrictions on car sales, and a slowing economy take their toll. India never got off the ground.

With sales heading towards the 17 million mark, the U.S. market also could be heading into peak territory. The market is largely driven by lax lending standards. The average duration of new car loans is at an all-time high of 5.5 years. 25% of loans extend for 6-7 years, some last 8 years or longer. It will only take an increase in interest, and/or a tightening of lending standards, and the U.S. will join the rest of the world in the slow lane.