Auto Industry Outlook

As the auto industry continues to face challenges from chip shortages to rising inflation, the science of forecasting is coming under increasing scrutiny. The accuracy of forecasts is critical for businesses in the automotive sector, as they rely on these predictions to make decisions about production, pricing, and marketing. However, recent years have seen a number of notable forecasting failures in the automotive industry, calling into question the reliability of these methods.

One high-profile example came in 2015, when General Motors (GM) announced that it would cease production of its Chevrolet Cruze sedan at its Lordstown Assembly Plant in Ohio. This decision was based in part on GM's forecast that sedans would lose market share to SUVs and trucks in the coming years. However, this forecast turned out to be inaccurate, and GM was forced to reverse course and restart production of the Cruze just two years later.

More recently, the COVID-19 pandemic has highlighted the limitations of forecasting in the automotive industry. Despite numerous warnings from experts about the potential for a global pandemic, most automakers were caught off guard by the scale and severity of the outbreak. This led to a sharp decline in demand for new cars and trucks, which in turn caused a dramatic drop in production and sales.

While forecasting is an essential tool for businesses in the auto industry, it is clear that these methods are far from perfect. As the industry continues to face challenges from unforeseen events like the COVID-19 pandemic, it is more important than ever for businesses to be aware of the limitations of forecasting and to plan accordingly.