The big date was January 20, 2017 – the inauguration of Donald J. Trump as the 45th President of the United States (POTUS). This marked not merely a changing of the administration in the USA, but more importantly a key element in the overturning of the existing global power structure going back at least to 1944. The main source of power in the world is the “creation” of money. The respective central or national banks of the world perform this all important function, and certain central banks are more important than others. Those which come to mind today include the central banks of the USA (the Federal Reserve System), the UK (the Bank of England), the EU (the European or German Central Bank in Frankfurt), Switzerland, Japan and the much newer BRICS bloc. “BRICS” stands for Brazil, Russia, India, China and South Africa. Above the central banking system of individual countries or “supra national” states such as the EU, NAFTA and BRICS are organizations of global reach such as the World Bank and the IMF (International Monetary Fund). The most important newer such organization is the AIIB (Asian Infrastructure Investment Bank) which is led by Mainland China. China by herself has 17.9 percent of global GDP today, but more importantly the 100 plus member countries of the AIIB (by no means confined to Asia) control almost 80 percent of global GDP in 2017. The USA has a mere 15.6 percent of global GDP today compared to 50 percent in 1945. The USA has a mere 10 percent of the global vehicle industry in 2017 compared to 92 percent 70 years ago in 1947. The USA and its closest financial allies (mainly Japan) control less than 20 percent of global GDP in 2017. These are the important numbers – almost 80 percent of global GDP controlled by the members of the AIIB and less than 20 percent of global GDP controlled by the USA-Japan-etc. A major devaluation of the US Dollar is not far off. This will commence with a 2 to 1 devaluation of the US Dollar vis-à-vis all other currencies. Imported goods in the USA will thus double in price, and countries currently exporting to the USA will see their business shrink. Large export economies such as China and Germany will have to find alternative markets, and many of the 90-plus million idle Americans will hopefully be put back to work in domestic American manufacturing, trades and agriculture.
The US stock market indices (Dow Jones 30 Industrials Index, NASDAQ Composite Index, S&P 500 Index, Wilshire 5000 Index) all hit nominal highs on January 6, 2017 with the Dow reaching 20,126. Nevertheless, the stock market and the bond market is NOT the place to be. The US stock market has already lost much of its purchasing power in terms of the value of Gold Bullion, and the approaching devaluation of US currency will decimate this purchasing power even more. Investors should be short the US stock market, short US bond prices, and they should be stocking up on precious metals, foreign currencies (excepting the Euro) and hard foreign assets.
One important aspect which remains to be seen is how the rivalry between the USA and Mainland China will progress. One hopes that this will be resolved peacefully, and that all parties involved will see the importance of maintaining world peace, cross-national cooperation and global trade. The rhetoric of the Trump Administration vis-à-vis China has already softened, so this is a very positive sign.
Yet more evidence of the declining affluence of the USA can be seen in the rising average age of motor vehicles on the American road. Worldwide, the average vehicle in existence (automobiles, light trucks, large commercial trucks, motorcycles, motor-scooters, mopeds and motorized bicycles) is 5 years old. In the USA, it is now 12 years old. In “basket case” economies such as Argentina and Cuba, it is 15 years old and 30 years old, respectively. The only reason people refrain from buying a new vehicle is because they cannot afford to do so – statistically speaking, there is no other reason.
The global Auto Industry in 2016
2016 ended with the production of more than 150 million motor vehicles – cars, light trucks, large commercial trucks, motorcycles and motor-scooters. 67 percent of the market was held by Asian companies, 23 percent by the Europeans and the remaining 10 percent by the USA. The company with the largest unit volume was Honda of Japan (20 million), but this includes 15.5 million motorcycles and motor-scooters. Number 2 was Volkswagen AG of Germany with 10.3 million – VW’s sole motorcycle brand is Ducati of Italy which is very high end and low volume (44,000 bikes per year). Number 3 was Toyota of Japan with almost 10.1 million and number 4 was Hero of India (a motorcycle manufacturer) with 10 million units in 2016. Number 5 in the world was Hyundai of South Korea (which includes Kia of South Korea) at a little under 8 million units. Hyundai is also the strongest vehicle manufacturer in terms of overall financial strength, whereas VW of Germany fell to number 2 in terms of overall financial strength due to the cost of their self-inflicted diesel exhaust emissions scandal. Most of this cost was incurred in the expensive and highly regulated US market. In spite of this scandal, VW Group of America had its 4th best year since they officially entered the US market in 1949 with 591,054 units sold in the USA in 2016. VW will soon introduce a larger and redesigned Tiguan SUV (made in Germany), a large family SUV called the VW Atlas (made in Chattanooga, Tennessee) and perhaps even the very attractive Skoda brand from the Czech Republic.
Number 6 in the world was General Motors Corporation of the USA with just under 7.5 million units sold. Number 7 was the Ford Motor Company of Dearborn, Michigan with just under 6.4 million units sold. Number 8 was Suzuki of Japan (they make both cars and motorcycles) with a little over 5.3 million units sold in 2016. Number 9 was Nissan of Japan with a little over 5.17 million units sold. Nissan is an important corporate alliance partner of Renault of France, Dacia of Romania, Samsung of South Korea, Daimler AG of German and Lada of Russia. Number 10 was Fiat-Chrysler of Italy with 4.865 million units sold. There were 109 vehicle manufacturers in the world at the end of 2016.
Auto Group (2016) Units Major Brands
1 Honda (Japan): 20,043,838 Honda, Acura (15.5 million motorcycles)
2 Volkswagen (Germany): 10,300,000 Volkswagen, Audi, SEAT, Skoda, Bentley
3 Toyota (Japan): 10,083,831 Toyota, Lexus, Daihatsu, Hino
4 Hero Motor Corporation (India): 10,000,000 Hero Motorcycles
5 Hyundai-Kia (South Korea): 7,988,479 Hyundai, Kia
6 General Motors (USA): 7,485,587 Buick, Cadillac, Chevrolet, GMC, Opel
7 Ford (USA): 6,396,369 Ford, Lincoln
8 Suzuki (Japan): 5,303,081 Suzuki, Maruti (2,269,000 Motorcycles)
9 Nissan (Japan): 5,170,074 Nissan, Nissan Diesel, Datsun, Infiniti
10 Fiat Chrysler Auto (Italy): 4,865,233 Fiat, Lancia, Alfa-Romeo, Maserati, Ferrari
11 SAIC (China): 4,500,000 Baojun, Maxus, MG, Roewe, Soyat, Yuejin
12 Yamaha Motorcycles (Japan): 4,246,194 Yamaha
13 Bajaj Auto Motorcycles (India): 4,240,000 Bajaj
14 Kawasaki Motorcycles (Japan): 3,906,380 Kawasaki
15 Dongfeng (China): 3,500,000 Dongfeng (45% owned by Volvo AB)
16 Renault (France): 3,032,652 Renault, Dacia, Samsung
17 TVS Motorcycle Company (India): 3,000,000 TVS Motorcycles
18 Peugeot (France): 2,982,035 Peugeot, Citroën, DS
19 FAW (China): 2,700,000 Besturn, Freewind, Haima, Hongqi, Jiaxing
20 BMW (Germany): 2,416,466 BMW, Mini, Rolls-Royce (117,100 cycles)
21 Daimler (Germany): 2,134,645 Mercedes-Benz, Maybach, Smart
22 Solex Motorized Bicycles (France): 2,000,000 Solex
23 China Changan Automotive (China): 1,900,000 Changan
24 Chongqing Lifan (China): 1,635,894 Chongqing, Lifan (1.4 million motorcycles)
25 Mazda (Japan): 1,540,576 Mazda
26 Loncin Motorcycles (China): 1,500,000 Loncin
27 Mitsubishi (Japan): 1,218,853 Mitsubishi, Diamond Star
28 Beijing Automotive Group (China): 1,169,894 Beijing, AIG (12% owned by Daimler AG)
29 Tata (India): 1,009,369 Tata, Land-Rover, Jaguar
30 Zongshen Motorcycles (China): 1,000,000 Zongshen
31 Geely-Volvo Cars (China): 999,802 Geely, Volvo
32 Fuji-Subaru (Japan): 938,553 Fuji, Subaru
33 Great Wall Motor (China): 869,592 Great Wall
34 Isuzu (Japan): 669,284 Isuzu
35 Sanyang Motorcycles (Taiwan): 620,000 Sanyang
36 Piaggio Motor-Scooters (Italy): 615,500 Piaggio
37 Jinan Qingqi Motorcycle Company (China): 612,993 Sinnis
38 JAC Automotive (China): 584,038 Anhui, Jianghuai
39 Kymco Motorcycles (Taiwan): 570,000 Kymco
40 Brilliance (China): 562,308 Brilliance
41 Chery (China): 525,922 Chery
42 Iran Khodro (Iran): 509,204 Iran Khodro
43 BYD (China): 446,885 BYD
44 Mahindra (India): 422,121 Mahindra
45 Italika Motorcycles (Mexico): 400,000 Italika
46 Saipa (Iran): 368,778 Saipa Diesel, Pars Khodro
47 Avtovaz (Russia): 307,890 Avtovaz, Lada, Moskvitch
48 Royal Enfield Motorcycles (India): 302,591 Royal Enfield
49 Harley-Davidson Motorcycles (USA): 249,849 Harley-Davidson
50 Hunan Jiangnan Automobile (China): 221,524 Hunan, Jiangnan
51 Dafra Motorcycles (Brazil): 200,000 Dafra
52 Guangzhou Automobile (China): 199,341 Guangzhou, Changfeng, Guangqi
53 Zanella Motorcycles (Argentina): 168,000 Zanella
54 Paccar (USA): Big Five 152,589 Kenworth, Peterbilt, DAF, Tatra, Foden
55 China National Heavy Duty Truck (China): 152,218 China National Heavy Duty Truck
56 Ashok Leyland (India): 134,603 Ashok Leyland
57 FAW Haima Automobile Company (China): 111,878 Haima
58 Shannxi Auto (China): 107,377 Shannxi
59 Minsk Motorcycles (Belarus): 100,000 Minsk
60 Proton (Malaysia): 97,662 Proton, Lotus
61 Xiamen King Long (China): 93,927 Xiamen, King, Long
62 Gaz (Russia): 83,408 GAZ, Volga
63 Modenas Motorcycles (Malaysia): 83,333 Modenas
64 Tesla Motors (USA): 80,000 Tesla
65 AKT Motorcycles (Colombia): 80,000 AKT
66 Southeast Fujian (China): 70,019 Soueast
67 Zhengzhou Yutong (China): 67,801 King Long, Higer, Zhongtong Bus, Ankai
68 Rongcheng Huatai (China): 66,119 Hawtai
69 Navistar International (USA): 65,101 Navistar, International
70 Guihang Youngman Lotus (China): 63,724 NEOPLAN, MAN, Lotus
71 Sollers OAO UAZ Severstal Auto (Russia): 57,171 UAZ
72 Triumph Motorcycles, Limited (England): 49,000 Triumph
73 Eicher Motors, Limited (India): 46,701 Eicher, Royal Enfield
74 IMZ-Ural Motorcycles (Russia): 42,667 IMZ-Ural
75 Chengdu Dayun Automotive Group (China): 40,422 Dayun, Weichai
76 ZAZ (Ukraine): 40,120 ZAZ
77 Hebei Zhongxing Automobile Company (China): 37,354 ZX
78 Jincheng Suzuki Motorcycles (China): 36,000 Suzuki
79 National Electric Vehicle Sweden (China): 35,000 formerly Saab Automobile
80 KRAZ (Ukraine): 30,655 KRAZ
81 Bohdan (Ukraine): 26,000 Bohdan
82 Polaris-Indian Motorcycles (USA): 16,250 Victory, Indian
83 PAZ (Russia): 10,000 PAZ
84 DINA Camiones S.A. de C.V. (Mexico): 8,395 DINA
85 Agrale (Brazil): 5,000 Agrale
86 REVA (India): 4,000 REVA
87 Gogoro Motor-Scooters (Taiwan): 4,000 Gogoro
88 Clews Competition Motorcycles (England): 3,500 CCM
89 Hindustan Motors (India): 2,500 Hindustan
90 Aftab Automobiles (Bangladesh): 2,400 Aftab
91 TVR Motors Company, Limited (England): 2,000 TVR
92 Pragoti (Bangladesh): 1,064 Pragoti
93 MAZ (Belarus): 1,000 MAZ
94 Norton Motorcycle Company (England): 1,000 Norton
95 Pyeonghwa Motors (North Korea): 650 Pyeonghwa
96 McLaren Automotive (England): 375 McLaren
97 Optare Group, Limited (England): 320 Optare
98 Métisse Motorcycles (England): 300 Métisse
99 Boss Hoss Motorcycles (Tennessee, USA): 300 Boss Hoss
100 Mastrettadesign Tecnoidea (Mexico): 200 Mastretta
101 Sungri (North Korea): 150 Sungri
102 Ariel, Limited (England): 100 Ariel
103 Jetcar (Germany): 100 Jetcar
104 Confederate Motorcycles (Alabama, USA): 61 Confederate
105 Midual Motorcycles (France): 35 Midual
106 Gumpert (Germany): 30 Gumpert
107 Venturi (Monaco): 30 Venturi
108 Hesketh Motorcycles (England): 24 Hesketh
109 Avinton Motorcycles (France): 10 Avinton
150,748,268
