US Auto Sales Sag, Hyundai Meets Carmageddon
by Wolf Richter
WolfStreet.com
Jul 4, 2017
So let’s see how we can put a positive spin on this.
Ford, GM, Hyundai and others tried hard to curtail their sales to rental car companies, or whatever. That’s was the theme among analysts on Monday, after automakers reported crummy June new vehicle sales.
What really happened?
Rental car companies continued to trim their fleets as they’re traversing their own structural hell, squeezed by ride share companies and falling used car wholesale prices. They’re not buying as many vehicles anymore because they don’t need more, regardless of what automakers are trying to do to sell them more.
Retail customers are switching to used cars that are competing often on the same dealer’s lot with new vehicles. They’re particularly after recent-model year cars that look similar to new cars but sell at much lower prices. Dealers buy them at auctions around the country, where rental car companies and leasing companies are selling them. Used vehicle sales are expected to set a record this year north of 41 million vehicles. This is particularly eating into new car sales, the mainstay of rental car companies (rather than new truck sales).
Consumers do this because they’re stretched to the limit by new car prices that continue to rise, even as wages cannot keep up. Edmunds reported that in June:
The average monthly payment jumped to a record of $517 (up from $510 in May)
The length of the average auto loan rose to a record 69.3 months
And the average amount financed jumped by $631 from May to $30,945.
The fact that negative equity on trade-ins hobbles from record to record doesn’t help matters. So something has to give.
The Rest…HERE
