How will a looming auto industry downturn impact Tennessee?

Jan 18, 2018

NASHVILLE, Tenn. (OSBORNE)  --  A longtime analyst says one of Tennessee’s largest employers is headed for a downturn.

Nissan, General Motors and Volkswagen all have large assembly plants in Tennessee. Nissan’s North American headquarters is located in Franklin.

The new Cadillac XT5 crossover SUV is now being built at the GM plant in Spring Hill.
Credit GM.com

Mark Wakefield with the consulting firm Alix Partners has been researching automotive trends for 25 years. He’s predicting the industry will build some 2 million fewer cars and trucks over the next 24 months.

Wakefield says large swings in auto sales are pretty routine, but that doesn’t lessen the sting whenever there’s a downturn.

“This might sound like quite a drop, but historically that’s about a thirteen percent drop and most of the cyclical ups and downs of the auto industry go more around the 15 to 25 percent drop.”

Wakefield says the good news for Tennessee is that its auto assembly plants are all relatively new and so were built to quickly adapt to market changes. He also notes that many local plants are already building the trucks and SUVs Americans prefer.

Looking further into the future, Wakefield says the automotive industry faces some daunting challenges. For example, young people are buying fewer vehicles.

“Below 29 years old are five percent less likely to have a license now than they were in the year 2000 for that generation. And so if you don’t have a license you’re probably not buying a car.”

Mark Wakefield says new technologies are also impact the auto industry. He notes the growing importance of electric vehicles, self-driving vehicles, ride sharing, and networked vehicles.