With every great sales boom, comes the bust. Auto sales going bust won’t happen anytime soon; however, there is a slowdown coming. According to a new report from CNBC, U.S. auto sales are beginning to fall as new-car prices continue to climb. Not only are those higher prices squeezing out those with less-than-stellar financial situations, but those who are financing cars are also borrowing more, too.Â
Auto sales are expected to drop nearly 2.5 perfect this quarter, according to CNBC, which cited J.D. Power and LMC Automotive as the source of the data. That’s about 4 million fewer cars than the year prior. Retail sales, which exclude rental and fleet sales, are expected to drop about 5 percent to 2.9 million, according to the publication. It’s the first time in six years when retail car sales fell below 3 million units, according to senior vice president of J.D. Power’s data and analytics division.Â
While the economy continues to chug along, there are looming clouds that could rain on the whole auto sales parade. Last year, auto loan defaults started to rise, hitting the highest point since 1996 and continued to rise as auto-loan delinquencies of 90-plus days hit 7 million Americans. Used car sales jumped as the price of new cars skyrocketed while zero-percent interest loans for cars began to disappear.Â
Automakers are getting cautious about the future. Industry veterans know the automotive industry is cyclic. Sales will grow, then they’ll contract. Right now, sales of sedans are crashing as consumers move to roomier options like crossovers, SUVs, and trucks thanks to a plethora of credit and extended loan terms. Companies like General Motors are trying to get out ahead of the slowdown and prepare for the next auto sales boom. That’s why the automaker is making changes now—investing in electric and autonomous vehicles, cutting sedan production, and building more crossovers, trucks, and SUVs that earn higher profits, which GM will use to subsidize development of EV and self-driving technologies.Â
Comments
If many are having a hard time affording vehicle prices at current levels just wait until these all electric and self driving ones start coming online in larger sizes or CUV’s. 50-70K prices will be the new norm in another 5 years with less and less good paying jobs out there. Used vehicles will skyrocket in sales. Yes a new Malaise era is almost upon us.
Brilliant strategy, raise price lose sales,lose money. That the way to run a business.
Chrysler actually tried this “brilliant” strategy in the mid 1970s. You see where that got them.
Tax refunds are also down $500 on average…
Cars are expensive and getting more so. What to do? One option some people like is car sharing. As well as being a money saver, it’s getting to be more convenient. Presently though, car sharing has a limited appeal. However, AEVs will make car sharing super convenient and after a time, cheap too. So, expect most people to stop buying cars for themselves and instead use AEV taxis.
The trend to AEV taxis will see ICE cars get even more expensive and for most people, simply just too expensive to buy new and own. The future for ICE cars looks bleak.