“Stalled New-Car Sales: High Prices and Interest Rate Hopes” (Note: I rewrote the title to make it more concise, engaging, and SEO-friendly by including relevant keywords like “new-car sales”, “high prices”, and “interest rate”. This title should improve search engine rankings and attract users searching for this topic.)
Car buyers are in a real bind, and it doesn’t look like things will be getting any better soon. Despite automakers wanting to sell and lenders willing to lend, many folks are still putting off those big-ticket purchases. And honestly, it’s no wonder: the cost of living keeps rising, and the threat of economic uncertainty hangs in the air like a thick fog. Throw in this being an election year and it’s no surprise we’re looking at a slower-than-expected sales slump that could last well into the second half of the year.
According to Automotive News, August sales didn’t exactly set the charts ablaze, with 17 days of sales still shy of the numbers projected by many industry insiders. Even Labor Day weekend – a prime time for retailers to make some hay – failed to deliver the predicted sales boost. As a result, analysts are scrapping their initial estimates, with GlobalData alone tweaking its projection downward by 200,000 units. Yep, that’s right, 16.4 million vehicles sold for the entire year, down from where they thought they’d land.
“It’s all starting to unravel,” said GlobalData’s Jeff Schuster. “We don’t see any significant bounceback coming anytime soon.” Seemingly, those millions who left the market due to the pandemic still aren’t back in the thick of things, thanks in large part to those oh-so-daunting monthly payment hurdles. And that payment-to-income ratio is causing consumers to think twice.
As an aside, if you’re one of those lucky folks still making big purchases, be aware the average transaction price is skyrocketing, now clocking in at nearly $50,000. You do the math – and keep in mind that once-unassuming luxury territory has evolved into mid-range car turf.
But hey, car shoppers aren’t the only ones dealing with sticker shock. Lenders are tightening the purse strings, nudging loan lengths from your average 60 months into 84-month or – dare we say – downright draconian 10-year payment plans. Yeah, monthly payments are on a serious upward trajectory. Speaking of which, nearly a quarter of last year’s new car buyers opted for a whopping $1,000 monthly payment (because who doesn’t want that much stress?). Insurance companies are piling on – because why not, really? – and even auto loan repossessions have risen a whopping 23% year-over-year.
All in all, things have gotten mighty complicated out here. Cheap-seat options used to be the norm (think Mitsubishi Mirage or Nissan Versa), but we’re seeing those types of vehicles dwindle as fewer consumers can stomach the strain of big-ticket payments and sky-high insurance premiums.
Industry experts like J.D. Power’s Tyson Jominy are cautioning against a rebound in second-half sales, pointing to a perfect storm of buyer resistance and economic uncertainty. And if you think our sales rates will bounce back to the pre-pandemic days of yore, think again: many of us have simply gotten priced out of the game.
As Jominy himself put it, we need to “re-frame” our expectations of this industry. And when even industry insiders are painting this dire of a picture, we’re inclined to agree – this ain’t the recovery many had hoped for, that’s for sure.
