Those customers at the lower end of price spectrum of the United States auto industry are being forced to move out of the market for new cars because most of the prices of the new models and vehicles are much higher which is slowing down the sale of auto in teh country, said a recent forecast of the industry.
According to J.D. Power and LMC Automotive report that forecast auto sale in the country, there is expected to be a 2.5 per cent fall in the sale of auto in the first-quarter of the current year and the total sale is expected to be about 4 million units.
There will be an anticipated drop of about 5 per cent in the sale of cars in the retail segment which does not include sale to rental car companies and other commercial businesses, with sale figures falling to about 2.9 million units in the first quarter.,
Thomas King, senior vice president of J.D. Power’s data and analytics division, said that this is the first time in more than six years that the total retail sale of autos and cars in the first quarter of a year would go down below the 3 million units.
This therefore presents more evidence of the slowing down of sales of vehicles in the second largest auto market of the world compared to the record levels of sale that the industry had managed to achieved following the 2008 global financial crisis
King added that customers are still ending up paying remarkably high prices for cars and other vehicles even though there is slide in the volume – especially in the segment of cheaper cars. The prices of new vehicles are touching record monthly highs even though the retail sale of vehicles that are priced below $25,000 are anticipated to drop by 12 per cent in the first quarter of the current year which would be more than double the overall decline in the auto industry.
Analysts are expecting that in the first quarter of the current year, the average price of a new vehicle is anticipated to be the highest for the first quarter ever and hit $33,319. Compared to the first quarter of 2018, the average consumer is being forced to pay $1,000 more per purchase.
LMC Automotive President of Global Forecasting Jeff Schuster said that industry data clearly indicates that the new vehicle market is losing out on more and more buyers because of the high prices and such customers are turning their focus to the used cars as manufacturers to give them adequate supply of cheaper vehicles.
“The challenge will be holding discipline as new vehicles launch and competitive pressure grows,” Schuster said. “The Fed’s decision to hold interest rates will help stabilize the interest element of the rising cost of buying a new vehicle.”
(Adapted from CNBC.com)