Rubin says half of U.S. auto plants are surplus

A new report warns the U. S. auto industry will undergo a massive correction that will yank 25 million cars off American roads over the next five years and kill 200,000 more jobs as half the country’s 51 auto plants are permanently shut down.

“Just like U. S. housing sales and starts have fallen to levels with no modern precedent, the drop in U. S. vehicle sales and production should be just as dramatic,” says the report, written by CIBC World Markets chief economist Jeff Rubin. “Except in this case, long-term changes in the way Americans drive will mean that the good times for the auto industry are never coming back.”


Easy credit and cheap oil fuelled a shopping spree of cars and trucks at a rate of 16 million units over the last five years. Those levels are not returning, Mr. Rubin predicts, even when the recession ends.

“Between consumer deleveraging, further job losses and ultimately soaring gasoline prices, tomorrow’s auto-vehicle market in the U. S. is likely to shrink to something half its former size.”

Fifteen million U. S. car buyers will exit the market by the end of 2014 as they pay down existing debt and automakers withdraw leasing and other forms of credit, the CIBC report said. When the global economy improves, gasoline prices will rise with it, forcing another 10 million Americans off the road, it says.

Mr. Rubin says the resulting decline in vehicle ownership rates will translate to a future vehicle sales rate in the range of eight million to nine million a year, another 30% to 40% fall from 2008 levels. At that rate, the effects on automakers and the communities that depend on them would be devastating.

National Post