Why Are U.S. Auto Sales Suddenly Slipping into Reverse?

When news leaked out Tuesday (May 16) that Ford Motor would cut 10 percent of its salaried workers, it underscored how the auto industry’s strong sales are slipping after years of consecutive growth since the Great Recession.

In April, the industry reported a 4.7 percent sales drop, according to industry tracker Autodata. General Motors, Fiat Chrysler and Ford showed declines of 7 percent or more in sales. Japanese car companies also were off in the North American market, although not as much.

As vehicle demand has ebbed, automakers find themselves dealing with bloated inventories. At the end of April, GM had enough vehicles to last 100 days, with 60 days the ideal level.

The lower sales affect both sedans and high-margin SUVs and trucks, which have been benefiting from lower gasoline costs. The most sluggish lines are small and midsize cars, which larger vehicles overshadow.

And due to government regulations, it’s not as simple as simply shutting down most small car production capacity.

Click to continue reading the CBS News report.

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