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.
Subscribe to GM Authority for more auto market news and around-the-clock GM news coverage.
Source: The Detroit News
Comments
In my area, the Chevy dealership that sold the most cars only sold 102. and 98 of those cars were vettes.
My dealership only sold 77, and another only 24. Seems awful low to me.
I had to lease this time around to keep the payment down. I’ll probably have to go CPO next time.
For those of us in this business, this is a tense time. With the current administration keeping tariffs and trade in turmoil, the prices of vehicles climbing at an alarming rate, buyers becoming saturated with higher payments, cost of living/rents (at least in southern California) hitting a breaking point, gas prices sitting around $4/gal out here and at a national high……….not to mention the “tax reform” that has done very little for the average American.
Where I work, we have the Volvo and Mazda. I’ve been here for just short of 4 years now and I’ve seen a huge change with the Mazda brand. They (some bozo in Japan I guess) decided that Mazda needs to now be “Mazda Premium” and they are quickly and actively moving the brand in that direction. Well, at least they are trying. Mazda sales have been down all this year so far, averaging about 17% below last years numbers. Keep in mind that this new approach actually started in late 2017. Last years numbers were nothing to celebrate much either. The fact that Mazda has never been a huge player in the market means that those smaller numbers are only getting smaller! The fact that Volvo is also not a huge player leaves our dealership with some fairly slow days any more.
People are just getting too buried with debt again and the income is certainly not keeping up with it. So yes, new car sales will take a hit.
My 2019 Cruze LS was just under $21,000, and has payments of $434.00 for 48 months. Obviously many are breaking their wallets with SUV’s.
GM doesn’t publish monthly sales figures any longer (neither does Ford and FCA will follow), but Automotive news “estimates” Silverado sales were down about 17% with GMC Sierra sales dipping about 6% for April 2019. Meanwhile over at Ram, pickup sales surged by more than 20%. Personally, I think GM has a major problem on their hands. Expect ever increasing incentives to get more of these trucks “over the curb”.