Skip to comments.Auto sales close to hitting the brakes
Posted on 07/02/2014 3:29:01 PM PDT by Lorianne
America's auto industry, in the midst of a five-year run where sales have rebounded more than 55 percent, is close to seeing a slowdown according to a new study.
The AlixPartners 2014 Automotive Study suggests sales of cars and trucks in the U.S. will hit a peak this year and then gradually pull back.
Read More GM announces 6 new recalls, 7.6 million cars in the US
"This is a cyclical industry and we think this current cycle has just about run its course," said Mark Wakefield of AlixPartners. "We're a little less optimistic than others about the demand for new vehicles staying this strong."
For 2015, AlixPartners estimates U.S. Will peak at 16.7 million before gradually starting to pull back.
Interest rate concerns
A primary reason new vehicle sales are poised to slow down, according to the new study, is the expectation of rising interest rates.
"We're living in an unusually calm world for interest rates," said Wakefield. "We believe the Fed will start to raise rates and when that happens, interest rates for auto loans will also go up."
As a result, Wakefield believes the purchasing power for potential car and truck buyers will diminish.
(Excerpt) Read more at cnbc.com ...
How much of a price increase is happening with today’s cars versus 5 years ago.
Younger family members have priced later model replacement vehicles for their 5 year and old vehicles.
The increased costs are outrageous. Non are buying a new vehicle. The increased costs coupled with Obozo care costs make a new car a no go.
So they are getting their used cars serviced at Big O and other non auto company service areas. They will be driving their cars longer until the prices on comparable new cars come down.
“GM is dead and Osama is recalled”
Anecdotal evidence: I drove past a marshaling yard next to the Chevrolet/GMC full size truck assembly plant in Flint yesterday. It was packed to the rafters. FWIW.
I just bought my husband a 4-wheel drive 1994 PU for 4K for a farm truck, it looks almost new. We could have gotten him a new one for 40K and kept it for 15 years or we can buy these used ones and use them on the farm 2 or 3 years and save money and not worry about them getting dirty and greasy.
I bought a 2001 Rodeo 7 years ago for 3.5K and it’s still going, that’s $500 a year, most people I know pay more than that a month.
I also got a minivan the same year on a trade with my brother, my DIL commuted 140 miles a day for 4 years and I still drive it too.
The only reason I would consider getting a new car is if the gas mileage was really great but the money I’d save on gas would be a lot less than I’d spend on the initial purchase.
I had a friend who had a perfectly good PU that was paid for and wanted to save on gas so she took on a $400 a month payment to maybe save $50 a month.
It just doesn’t make sense to me especially since I don’t care to keep up with Joneses, I just need something to get me there and back again in comfort.
I think the problem is I have a job, pay my bills and support my family. I don't have the luxury of sitting on my arse collecting "free money" so I can buy a new car, and rims.
The AVERAGE fleet age in the US is 11+ yrs old now, and getting older fast.
Company trucks must be replaced, but without credit-criminal financing, like what Ally has been doing for 4 years, most average folks are keeping cars MUCH longer than in the past.
Sorry, there is no way in h*ll I can justify spending $45G’s for a new sedan, when my older car runs just fine.
We have finally reached the point where even engine replacements on older cars are more cost effective than buying new.
Lets put things into perspective a bit however, “cash for clunkers’ damn near wiped out the secondary market (perfectly good cars destroyed). Where we’re people going to get cars? Now it sounds more like the secondary market is rebounding and new sales are going to slump.
Ours was 11 yrs old with 187k miles, didn’t trust its continued use and wasn’t worth any major $ being put into it. Bought a used murano will drive it to the 200k frame as well. New cars are just way over priced.
I bought my beater about 6 years ago for $5000 cash. The car was only about 6 years old.
Today, the same year and model with the same models on my beater sells for MORE than I paid for it 6 years ago. I’ve seen the same thing for other cars.
I just bought my wife a 2013 Lincoln MKX. I am still driving a 2008 Shelby GT500 with just under 30k miles.
Still driving my 2005 Acura TL with 250k. Runs great. They’ll have to yank the steering wheel FMCDHs.
In before ‘bring jobs back now...’
Average age of cars on the road is over 11 years, or 3 years older than they were 20 years ago.
Cars do stay in good shape longer today, but seven year loans and the large numbers of the relatively wealthy might seem to indicate steady, rather than declining, new car sales.
On the other hand, if Democrats get their wish, lots of new high-mpg vehicles will be sold, resulting in sales growth. The Ford Focus will become the family car of choice (as in Europe) instead of the Fusion.
Your friendly Goldman Sachs people are bundling the paper and selling them, just the way they did with those wonderful mortgage derivatives.
Henry Ford used to say "I take my hat off whenever an Alfa Romeo goes by." Me, I throw mine down in a rage whenever a $40,000 Ford goes by.
No, there ain't gonna be no cars in the future. The model is "Collective Transportation." Soros is bettin'bout a billion on the "Uber" concept. It's a Third World version of minibuses. Cram in, give the driver of the electric vehicle a buck, get off somewhere near (hopefully) your estinmation, walk the rest.
$10 gas? Good for the obese peasants! Very Green, you know.
Must be time for “cash for clunkers”
I wasn’t aware of GS gearing up with the 7 year flivvers.
Wait until the warranties expire on these 7 year wonders, and the owners just walk away from the car. Or they drive their used car to dealers and leave it.
“Grampa Dave, the $35,000, 7-year loan flivvers are the next derivative scam.
Your friendly Goldman Sachs people are bundling the paper and selling them, just the way they did with those wonderful mortgage derivatives.”
You are doing a great job re your used vehicles.
“I had a friend who had a perfectly good PU that was paid for and wanted to save on gas so she took on a $400 a month payment to maybe save $50 a month.”
We see idiots like the one you described above all the time in Californicator land. They wonder why they are broke with their new car payments, new I phone and its full service plan. Very few of them have any money left over for anything after their monthly car and I Phone payment.