New models are on the way but the Lots are Full Car Dealers Say.
“We are turning down cars and are being more picky on the cars we stock,” said Brian Benstock, general manager of Paragon Honda in New York City. “We just can’t take more. We’re full.”
New car sales have been slumping in many of the world’s major auto markets. In China, sales were down more than 12 percent in the first six months of the year.
In the United States, after many years of strong sales, many consumers are driving vehicles that don’t need to be replaced. Newer cars and trucks tend to be more durable and hold up longer than cars made even a decade or two earlier. At the same time, the average price of new vehicles has risen to around $35,000, while interest rates on auto loans have edged higher. That means people have to be willing and able to spend more to buy a new car than they were just a few years ago.
“It’s a double whammy,” said Mike Jackson, chairman of AutoNation, the nation’s largest chain of new-car dealerships. “Customers are having monthly payment shock.”
The slump in car sales has already forced some companies to cut production and jobs. General Motors recently stopped making cars at a plant in Lordstown, Ohio, that made the Chevrolet Cruze and is winding down manufacturing at another factory in Detroit. Honda recently ended a shift at its plant in Marysville, Ohio, that makes its Accord sedan and other models.
What is perhaps most worrying for the industry is that sales of larger vehicles — S.U.V.s and trucks — that had more than made up for a recent collapse in purchases of sedans, are showing signs of strain.
Despite declining car sales manufacturers kept of profits by selling more expensive SUVs but the boom is now over
Trump won the 2016 election with help from rust-belt states. Now manufacturers are scaling back production on Michigan and Ohio.
Expect this trend to accelerate.
Mike “Mish” Shedlock