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News Link • Transportation

Pop Goes The Car Bubble . . . And It May Not Be a Bad Thing

•, By Eric Peters

he seven-year loan.

"Free" money (zero or very low interest).

Give-away leases.

The car industry is riding a bubble that's proportionately as large as the housing bubble of a decade ago. And it is going to pop. For the same reason that a wave has to crest and wash ashore, once set in motion.

Signs of trouble abound. They build them – but no one comes. Not without inducements that amount to giveaways.

For several years now the car manufacturers have been resorting to truly desperate measures to prop up new car "sales" – in air quotes because it's a dubious proposition to describe as a "sale" a transaction that involves exchanging the item for  a sum insufficient to cover the cost of its manufacture, plus a profit sufficient to make the exercise worthwhile.

Yet that is exactly what is going on.

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