By MICHAEL HANNIGANAssociated PressJanuary 22, 2019AUSTIN, Texas (AP) — If you’re thinking about moving to the auto business, you’re not alone.
The auto industry is booming.
The demand for vehicles has grown, and manufacturers are using their growing muscle to push prices down.
But there are big problems in many sectors of the auto world.
The big problem, according to a panel of experts on the industry who met Tuesday at the Texas Association of Business’ annual convention, is the high cost of labor and the high costs of capital.
The panel was led by former Vice President Dan Quayle, who has been outspoken in criticizing the auto industries “dying” economy and blamed government policies for the trend.
It was also led by John Sommers, a former chief economist at Moody’s Analytics.
The industry has become more competitive in many ways, Sommer said.
But its very low profit margins, the high risk of bankruptcy, and the lack of safety, emissions, and maintenance issues that were a problem in the old days have gotten worse in recent years, according the panel.
In a panel on the future of the automotive industry, Sondre Johnson, who is president of the National Association of Manufacturers, said the industry’s challenges are not just economic.
He said many are political.
“We have a political problem, not only in terms of how we think about this industry but also how we regulate it,” Johnson said.
“It’s hard to say who’s going to pay for what and how we’re going to solve the problem.
And the more you regulate, the less you have a market for what you sell.
And so the more we regulate, and more regulation means higher costs.”
The problem is not just about labor, said Dan Smith, an economics professor at Texas Tech University.
The problem is the quality of labor.
The more expensive it is, the higher the rate of return.
That’s true for cars, but it’s also true for every other industry.
“If you have less money, the more expensive you are, the lower the rate you’re going.
If you have more money, you have higher rates of return,” Smith said.
Smith and Johnson both pointed to an article in the Wall Street Journal in August that said the cost of capital in the U.S. auto industry rose to $1.2 trillion last year.
That number includes capital expenditures and debt payments.
In 2015, the year after the auto companies collapse, the cost per vehicle in the United States stood at $1,350.
That cost was about $1 per vehicle five years ago.
“I think it’s clear that the auto sector is at an all-time high and that it’s been driven by high debt,” Smith told the panel at the event.
“There’s no question that the industry is not making enough money to meet those costs.
I’m just not sure that that’s good business.”
The big challenge is that the costs are out there, but there’s not enough money in the economy,” he said.
Johnson said the biggest problem in terms for the industry would be the lack or inability to get capital investment and loans into the industry.
He cited a recent survey that showed that the U and Mexico had the most risky and most expensive auto markets in the world.
Johnson and Smith said there are also issues with the quality and safety of the cars and trucks. “
We have one of the lowest profit margins in the industrialized world,” he added.
Johnson and Smith said there are also issues with the quality and safety of the cars and trucks.
There are safety issues with a number of the parts in the industry, including the tires, engine and transmission, and air bags, which can catch fire.
The cost of safety equipment in the truck industry, which includes air bags and other safety equipment, is higher than that of cars.
“That’s a big problem because if you look at the cost-per-mile for the average vehicle, it’s actually much higher in the big companies,” Smith pointed out.
“You’re talking about a 10 percent or 15 percent premium for an extra 20 miles per gallon,” he continued.
“And I’m not talking about the cost for a gas station, or a gas pump, or anything else.
This is an industry that has to be a cost-plus model for safety.”