Car Manufacturers Concerned About Slowing U.S. Auto Sales

Top industry executives are reportedly increasingly concerned about declining auto sales in the United States – understandably, since we’re talking about the world’s second-largest car market.

CNBC reports that both January and February auto sales figures dropped from the previous year and continued to fall in March, reducing first-quarter new car sales demand by almost 4 per cent compared to 2018. Some car manufacturers believe the arrival of Spring will boost sales, but not everyone is so optimistic.

“Most in the industry have been saying that sales would decline this year, and we’re actually seeing that happen,” Hyundai Motor America chief operating officer Brian Smith said. However, Hyundai does believe that its increased number of SUV and crossover models will ensure that it isn’t hit as hard as it would be with a sedan-focused line-up.

Companies like General Motors and Ford are both looking to cash-in on the crossover boom, while Toyota believes it will actually be helped by its competitors turning away from sedans and small cars.

Head of AutoTrends Consulting, Joe Phillippi, estimates new car sales in the U.S. will top out between 16.6 million and 16.8 million by the end of the year, well down on the 17.27 million vehicles sold in 2018.

While some disagree about the best way to reverse that trend, most agree that vehicle prices could rise if President Donald Trump follows through with his threat of slapping a 25 per cent tariff on foreign-made cars and car parts. In fact, the head of Toyota’s U.S. automotive operations, Bob Carter, says tariffs could increase the price of a Camry by up to $4,000.

High-end vehicles would be hit particularly hard by tariffs, and prices of individual models could easily rise by $10,000 or more. Moreover, Porsche believes a 25 per cent tariff could reduce its U.S. sales by as much as 20 per cent.

This certainly isn’t a doomsday scenario, but analysts like Steve Rich from auto supplier Autoneum expect “stagnation” at best for 2019.

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  • LJ

    Cars are already overpriced 5-10k.

    • chris

      exactly

    • ErnieB

      At least!!

    • Wis

      This, and the fact that auto loans in the US are soaring and a bubble that will burst at some point should worry everybody in the US…

      • WalthamDan

        Agree. The much higher car loan rates and resulting higher monthly payments must be scaring plenty out of the market.

      • tkindred

        And their plan is to push SUVs, which are more expensive, and during a period of increasing gas prices, doesn’t seem like a long term solution.

  • Galaxium

    The biggest issue is the long-term market of cars. The demographic that primarily buys new cars is significantly dropping and dying off.

    Even as a millennial that loves cars, I see no reason to own my car in major cities – public transit is good enough and for certain trips, Uber/Lyft will suffice.

    • brn

      Uber and Lyft drivers need cars.

      This creates an interesting situation. If more people drop cars, the need for ride sharing services will increase. This will create a dramatic shift in supply and demand, resulting in both an increase in the cost of ride sharing and a reduced level of service.

      • Galaxium

        I think autonomous driving will help bridge that gap, as much as I hate to admit it.

  • blunt-o

    Well that’s more than enough extra co2 in the atmosphere. Some of us need to breathe. Stop all IC engines, and allow only electrics from here on. It’s not too late.

    • brn

      Fire up them coal plants! Mine more rare-earth elements!

  • BlackPegasus

    I have two theories as to why sales are cooling.

    – Modern cars are lasting longer: owners are keeping their existing cars because they’re simply built better than the cars from say circa 1990. Cars built in the last 10-12 years can easily see 100k-200k miles with proper maintenance.

    – Young adults simply aren’t as interested in driving and owning a car as previous generations were. Studies show Teens are holding off on getting their driver’s licenses at a later age.

    • independence01776

      Definitely #2 is part of it. Young folks in cities are going with Uber and Lyft rather than owning.

      The other factor not discussed is known as the Osbourne effect. When a new thing is starting to become available to replace something old and outdated, people put off purchasing until the newer product hit’s their price point, or is in the model type they are looking for. EV’s in particular battery powered cars are just starting to proliferate enough that some buyers are delaying their purchase of a new car, they are waiting for the EV that fits their need and pocketbook.

  • FlameWater

    People are importing 25 year old Japanese cars and you still can’t figure out what the problem is?

  • Karl

    This is a no brainer,price! Car prices are out of control and will only gets worse! Americans salaries simply haven’t kept up with these ridiculous average car prices.

  • Harry_Wild

    The more safety features and mini computer chips, electronics inside, the higher the cost of the car!

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