Macroeconomic Policies Affecting the Auto Industry
In most countries, the level of automotive production is closely correlated to domestic or regional automotive sales. Also the level of automotive sales and production is closely related to disposable income levels, interest rates and finance availability, consumer confidence and other factors influenced by macroeconomic policies. Production in particular often has long lead times, so consistent and predictable economic progress is important. Therefore, national macroeconomic and monetary policies which produce stability and consistency in GDP per capita growth are generally very significant factors affecting the level of automotive sales and production.
The following are the macroeconomic factors found to encourage automotive production and sales:

(a) Stable national economic performance. Producers need confidence to invest, and consumers and businesses need confidence in their future to purchase vehicle(s). They therefore all want to minimize uncertainty. Thus, wild fluctuations in economic activity should be avoided.

(b) Consistent national economic and regulatory policies. Likewise consistent national policies are critical to investment and consumer behaviour. Inconsistent policies may inhibit investment and sales as well as generate potentially large fluctuations in economic performance.

(c) Transparent economic and regulatory policies. Policies must be not only fair, but must be seen to be fair if external investment is to be encouraged. Thus great emphasis should be given to ways of maximising transparency. Simplicity of policies and regulations should be encouraged.

(d) Commitment by the government to the auto sector. Automotive investment requires large amounts of capital, which must be committed for a long period. Investors want to minimise the associate risks, so they want clear evidence that