Surplus Automobiles

8/7/09
Here's a headline from EIN News, "European Car Sales 'Will Not Recover for Five Years'. The European car industry will have to wait at least five years before sales return to pre-recession levels and faces recording heavy losses during that period, a gloomy new report has claimed. (telegraph.co.uk).
Taking this at face value, any reasonably efficient economic market analyst will then have the following conclusions:
1.) There is enough product (cars) already on the market.
2.) New product production need only match the rate at which present product becomes unusable. This is somewhat variable, because it depends upon mechanical integrity, maintenance, and public desire for new product design. However, the original EIN News claim is that the market will be extremely "dim".
3.) The prediction that the "[industry] faces recording heavy losses" strongly implies that there are too many automotive producers.
4.) Normal market conditions will require that several producers will go out of business, in order to balance market needs.
5.) Individuals, trusts, cooperatives, mutual funds, and government (socialized taxpayers) should not put money (invest) in automotive producers, unless expected loss of equity is tolerable for other reasons deemed more important.