The auto industry is shrinking as the world reaches 'peak car' - and it's dragging down the entire global economy

Rebecca Cook/Reuters

• The automotive industry is slowing faster than expected, and the shift brings massive economic threats.
• The sector represented 20% of GDP slowdown in 2018 and roughly 30% of the year's drop in global trade, according to the $4.
• Headwinds against automotive supply and demand are set to persist into 2020, as car saturation peaks in wealthier regions and sales in developing markets struggle to pick up the slack.
• $4.

The automotive industry is slowing faster than expected, and bringing massive economic threats with it.

The sector experienced a "sharp downturn" in production and sales through 2018, and projections call for a similar decline through this year, according to the International Monetary Fund. The IMF pegged the industry as a major factor in lagging industrial output, and said a prolonged contraction would directly affect the global economy.

People thought the lag in auto sales "would not last as long as it has," IMF chief economist Gita Gopinath told $4, adding that barriers to the sector's recovery "seem more durable than we thought."

The auto sector represented 20% of 2018's slowdown in GDP and roughly 30% of the slowdown in global trade, according to the IMF's latest $4 survey released this month. The declines come as certain markets reach maximum automobile saturation - also deemed "peak car" - and headwinds on automotive supply and demand threaten to pull the sector even lower.