In case you needed another sign we're in a recession...
Here you go... EU car sales just collapsed. This is why:

According to JPM's most recent figures, passenger car sales growth for August just crashed and burned.

BMW is down -51% from a year ago, VW dropped -60%, Daimler plunged -64%, and Volvo completely collapsed by -100% (!)

This might be devastating to one of the world's most important manufacturing industries, but it's unfortunately not too surprising.

After all, the auto industry is historically one of those sectors that get hit hardest by recessions.

During the last major financial crisis in 2008, new vehicle sales in the US dropped by 40%, from 16M to just 10M units.

Wells Fargo's Colin Langan goes as far as to call auto sales a classic indicator of recessions.

There are three main reasons:

The first reason is the obvious fact that buying a car is one of the largest financial commitments the average person will ever make.

It's right up there with new home purchases and marriage.

And guess what... home sales also fell by 20% and the median age of first marriage is at an all-time high of 30 years.

Financial instability is forcing people to push out major life decisions into an increasingly uncertain future.

This is especially true in Europe, where families are expected to spend 10-20% of household income this winter on utilities alone.

With that kind of bloodletting for bare necessities, there just isn't much left over.

The second reason is that just as cars are hard for people to buy, they're now also hard for companies to make!

Volvo already stopped all lines of production twice in the last 12 months due to semiconductor chip shortages.

And with electricity prices now exploding as high as €600/MWh, manufacturers are shutting down due to prohibitive input prices.

It's not that cars aren't being bought, they also aren't being made.

THAT is what a real recession looks like... crumbling infrastructure.

The third reason, however, is even uglier than the first two. People can not afford expensive loan for mortgage and car!

The question now is, how much will things deteriorate before central banks are politically forced into a pivot...

And when they finally do?

Analysed by Andrew