- The average vehicle price rose to around $48,000, and sales declined to 15.4 million vehicles (SAAR) in the last month of 2023.
- The auto industry currently primarily targets households in the top 20% of incomes due to declining affordability.
- Consumer spending on new cars hit a record high in 2023, but the industry faces challenges in maintaining sales volumes due to high prices and interest rates.
Auto sales began slowing late last year as “sticker shock” hit would-be American consumers hard. According to Bloomberg.
The report said potential buyers are currently “daunted” by the idea of 10% car loan interest rates. The average price of a car is now around $48,000, and sales in the last month of 2023 have fallen to 15.4 million SAAR cars, the report said.
This number is down from 15.5 million in the previous two quarters.
said Jonathan Smoak, chief economist at researcher Cox Automotive. bloomberg: The number of “households below the median income” purchasing new cars has decreased significantly, and they are now purchased “almost exclusively by households in the top 20% of income earners.”
He added, “Due to lower affordability, the new industry norm is closer to $16 million. We have lost about 10% of our purchasing pool.”
The grim end of 2023 is expected to continue into 2024, according to the report. Cox predicts auto sales growth will be less than 2% next year, which won’t quickly surpass the 17 million sales the U.S. recorded five years before the pandemic. It means that.
And the report notes that automakers are in no hurry to lower prices because they are content to reduce metal movement with higher profit margins.
Consumer spending on new cars in 2023 will reach a record $578 billion, marking the third consecutive year above $5 trillion, according to researcher J.D. Power. The average monthly car payment for consumers in December was an estimated $739, an increase of $9 from the same month last year, according to JD Power.
Smoke added: “Unless the industry finds a way to move back to a more affordable price point, we’ll see products that cater to higher-income and credit-worthy consumers.” And that ultimately limits sales volume. ”
You can read Cox’s December 2023 in full Click here for press releases and sales forecasts.
Posted by: Zerohedge.com
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