The world is still reeling from a poor economic climate. The worst industry right now is the automobile industry. Auto sales have plummeted, with some estimates at nearly 60% percent within the last 18 months.
During that time, both GM and Chrysler had to declare bankruptcy. Hundreds of car dealerships have been forced to close down due to poor sales or by a mandate by their car manufacturers.
The period of flux has been especially devastating to the luxury car dealers. Companies such as Hummer, Pontiac and Oldsmobile have either been sold or put out of business. Brand names such as Ferrari, Porsche and Lincoln MKT have seen their fortunes tumble due to concerns about their cars getting better gas mileage.
The Obama administration has attempted to infuse cash into the situation by developing the “Cash for Clunkers” program, encouraging buyers to turn in cars that no longer work in exchange for environmentally friendly vehicles.
The program has been a huge triumph. This week, Ford announced its first earnings growth in more than a year thanks to the “cash for clunkers” program and other cost-cutting efforts. The country’s second largest auto maker posted a $1 billion dollar profit in the third quarter of this year.
Though the program was an initial success in the short term, long term results won’t be figured out for another few years. Will the program actually develop jobs within the auto industry? Will there be sustained growth in car sales? These and other questions won’t be solved until the economy, in general, gets better.