When it comes to economics, you will often find that there is a “chicken and egg” situation for many things. While there is clearly something that starts off behaviour or a trend, over time, it can be difficult to know what the instigating or lead factor was. Before you know it, you have two aspects that go together very well and they both manage to impact on each other, creating a bigger situation where everything rolls towards an expected outcome. This can be seen with the state of UK car production at this point in time.
As with most things, especially with finances being tight for many people in the United Kingdom, this is a market that has noted a dip in sales. While there are reasons why many people have moved towards buying new or newer cars as opposed to buying older cars, there has definitely been a dip in the number of people looking to buy vehicles. The cost of owning and then running a car is very prohibitive for many people, so you can see why a lot of folk would prefer to use public transport, walk or even hire a car for the few occasions that they need to get from A to B with a vehicle.
Car Manufacturers need to Watch Demand
Of course, when the number of cars being bought starts to drip, car manufacturers will be very aware of this. It is not as though the car manufacturers will continue to make cars at the same level with no regard to what is happening in the market place, they will be very aware of trends and what is taking place. This means if consumers are buying fewer cars, less cars will be made. This is the same for any industry and while this style of story has been in the news of late, it would be the exact same for any other industry or sector.
If for some reason, there was a dip in demand in demand for coffee, this would make coffee growers or companies that produce coffee for the local market act and lower the amount of coffee they make. If there was a rise in public opinion against washing up liquid, for whatever reason, and people stopped using this product, the manufacturer would stop making the product, at least in the quantities that they used to before.
Demand and Supply are Clearly Linked
There are clear signals in the marketplace and manufacturing companies are very much aware of what is happening in their industry and sector. If there is a rise in demand for their products, they will try to produce more in an attempt to meet this demand, make more sales and bring in more income. However, there will also be action taken if the market moves in the other direction. When demand falls, production falls and of course, this may lead to a harsh outcome for many employees.
While car manufacturers will be at pains to avoid talking about the impact on jobs, there is no denying that a fall in the demand for products, and a subsequent dip in production, will usually lead to some people being laid off. This is where the cycle effect starts to kick in, and we have a situation where two separate issues work together to create a bigger outcome.
If there is a dip in the sales of cars, manufacturers will make fewer cars and this may lead to some employees being laid off. When the number of unemployed people rises, it is understandable that there is less money in the economy, and this means people will need to review their finances. This can lead to more people deciding that they cannot afford to buy a car, and this means that the demand for vehicles falls even further. This then impacts further on the vehicle manufacturers, and this may lead to more job losses or even plants being shut.
Before you know it, an initial dip has spiralled downwards into a very difficult situation, and the whole economy can suffer. It is important to know that assistance is available when you are faced with difficult financial times and it may be that a guarantor loan is what you are looking for.
When it comes to staying on top of your finances, it is essential that you get as much as help as you can.
Andrew Reilly is a freelance writer with a focus on news stories and consumer interest articles. He has been writing professionally for 9 years but has been writing for as long as he can care to remember. When Andrew isn’t sat behind a laptop or researching a story, he will be found watching a gig or a game of football.