Even with the growth of inflation numbers dropping, auto industry analyst say the price a new vehicle is still too high and borrowing cost are holding back potential car buyers.
“What is expected to be another lackluster sales year for automakers, industry forecasters expect third-quarter U.S. vehicle sales to come in roughly flat compared with a year earlier,” said the Wall Street Journal.
Car loans are also a contributor to the slow down. For a new car, the loan is at 6.84%. Florida is higher with the average loan rate at 7.7% according to car industry online publication Edmund’s. For used cars, it’s worse, hovering around 12%.
Several automakers are seeing a decline in sales. General Motors reports their sales are down and Toyota Motor’s U.S. sales also fell.
In 2019, the average vehicle was around $34,600, but according to car data analytics company J.D. Power, the average number currently is $44,467. Compared to last year, prices have slightly decline by around 3%, but J.D. Power says not even discounts offered by car dealers are helping to bring in customers.
“This market is still pretty unaffordable,” says Edmunds’ Jessica Caldwell. “Those prices present plenty of sticker shock for consumers who might be returning to the dealership for the first time in five or six years.”
On the horizon, there may be some breathing room for those looking to purchase a car if the Federal Reserve decides to cut the interest rates further. However, J.D. Power isn’t sure if another cut may help. They said new finance payments for a car, on average, is around $734 a month, which has increased from 2023.
In 2021 and 2022, there were consumers who were paying around a $1,000 per month for a new vehicle.
Marketing company Cox Automotive said they see more car consumers leasing vehicles. “Leases accounted for 25% of new-car sales in the third quarter, up from 20% a year earlier,” said Cox.
Cox also said people are buying smaller cars and SUVs. That number is higher than last year. The sales of midsize vehicles, trucks and larger SUVs have declined.
