New car prices are too high and Japanese cars last forever.
New car ads stress driver safety with loads of sensors that add to the costs.
Airbag failures fuel US consumer skepticism about car safety gadgets. The
self-driving hype is ignoring the increase in rent and consumer debt. Car
companies got it wrong…again. The article below mentions every illogical reason
for lower new car sales except climate change.
Auto Execs are Secretly Worried About 2019 Sales, by Wealth Authority.
This
past week marked the return of the annual New York Auto Show, a spring
tradition in the “city that never sleeps” where various automakers released 24
new vehicle models to the public. It was the typical pomp and circumstance
among the auto industry’s who’s who, with executives touting their company’s
abilities, lapping it up with the public and press, and talking about the
strength of domestic and global manufacturing.
But
there was something else significant that occurred at the New York Auto Show,
and it didn’t directly relate to any of the vehicles that were on display for
the public to see. No, the thing that arguably cast a black eye on the show is
what the industry’s top auto executives expressed in private interviews and
off-the-record conversations: they’re worried about 2019.
Yes,
auto sales haven’t been lighting the world on fire so far this year. Sales were
down in January and February to kick off the new year, but there were a lot of
factors at play to help explain the dip. For starters, the beginning of a new
year is always a slower time for purchasing, as consumers are still reeling
from the holiday spending period. The bad weather, namely the polar vortex that
engulfed a large portion of the nation, wasn’t exactly favorable either. And
the government shutdown that extended into February certainly didn’t help
things. But sales haven’t picked up since then, and it’s led to growing concern
among auto executives. As evidenced by behavior at the New York Auto Show, this
growing concern is starting to become more and more public.
Stagnant
at best — that seems to be the thinking among executives and auto analysts when
it comes to describing 2019 new vehicle sales. But there’s worry that even
“stagnant” may be a bit too optimistic. To put the context in perspective, vehicle
sales overall were down about 4 percent during the first quarter of 2019. In
fact, only four automakers reported increased sales over the first three months
of the year. That’s not good news.
So
what are some of the factors that may be stifling new sales? How about looking
at the prices of cars these days. Only about 30 percent of all vehicles on the
market these days have an MSRP of under $30,000. That’s compared to about half
of all vehicles that were below the $30,000 price point in 2012.
This
increase in vehicle prices has increased the average monthly lease payment to
more than $480 per month and the average payment to finance a vehicle to
purchase at about $515 per month.
Noting
this, more consumers could be opting to hang onto older vehicles longer or buy
used. If President Donald Trump moves forward with a 25 percent import tax on
foreign metals, that will only go to make vehicles more expensive — with the
trickle down effect surely impacting consumer behavior when it comes to new
automobiles.
Despite
bleak auto sales to mark 2019 so far, there are optimists who believe that
better things are ahead this year. For starters, spring is always the busiest
period of the year for auto sales. Additionally, many analysts predicted a dip
in automotive sales this year after the past several years experienced
year-over-year growth. Some even believe that we’ll see numbers that were far
better than what were projected when the 2019 quarter four numbers are
finalized.
The
important thing to note with the auto industry’s slow 2019 is that the industry
is far from the poor situation it was in when the economy bottomed out in 2008.
Many
automakers, such as General Motors, have been proactive in adjusting to
expected market conditions ahead of time, whether it’s involved layoffs or the
discontinuing of unpopular models. But new car sales are certainly something
worth keeping an eye on moving forward, as any extended lapse in sales could
lead to more far-reaching consequences.
Regards,
Ethan Warrick, Editor, Wealth Authority
Norb Leahy, Dunwoody
GA Tea Party Leader
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