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global demand for automobiles is likely to decrease annually for number of reasons.What are the implications...

global demand for automobiles is likely to decrease annually for number of reasons.What are the implications for the existing automobile manufactures and their suppliers?
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Answer #1

As demand for automobiles decline the demand curve shifts leftwards . So in the automobile market , both the price and quantity sold falls at equilibrium . Since price of automobiles fall the existing manufacturers and suppliers will face fall in revenue or profits .

This is likely to affect share prices of automobile manufacturing companies . The share prices will also fall . In the long run some companies may go out of business and supply adjusts to the new equilibrium .

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