The days of 0-percent financing and low monthly payments appear to be in the auto industry’s rearview mirror. According to a report from The Detroit News, April new vehicle sales truly began to show interest rates and new-car prices take squeeze buyers out of the market.
The average new vehicle price stood at $36,720 in April, the publication reported, citing data from Edmunds. The dollar amount is the highest average price so far this year. Also helping rising new-car prices are unfavorable interest rates, which hover above 6 percent.
“Shoppers are really starting to feel the pinch as prices continue to creep up and interest rates loom at post-recession highs,” Edmunds analyst Jessica Caldwell said.
The high prices have steered more buyers into the used-car market, which is mighty robust these days. A previous study showed two out of three car shoppers primarily looked at used vehicles instead of new cars. The study also showed the average new-car payment in 2018 grew to $547, a 4 percent increase, while the average used-car payment was $411, a 2 percent increase.
With so much focus on the truck and SUV market, the average price of vehicles has continued to grow as automaker squeeze more profits from the popular utility vehicles. However, a second study could be worse news. A study found the majority of pickup truck owners felt their vehicle was overpriced and many of them said they would not look at a truck again for their next vehicle. While new car prices have climbed in recent years, truck prices continue to climb far more quickly.
Should prices continue to rise, more shoppers may defect to the used-car market, which increases the chance of a prolonged new-car sale detraction. The bottoming-out period, very possibly, is far from close.
Source: The Detroit News