After two years of supply chain problems and reduced inventories, automakers are finally starting to build inventory.
But rising interest rates have reduced demand. Ford Motors, for example, said it expects 45,000 unsold cars. In an effort to curb inflation, the US Federal Reserve has raised interest rates five times this year, indicating more hikes are likely.
“The irony for the auto market is that the rapid movement in interest rates is reducing demand while the industry is poised to see volumes picking up from supply-constrained, recession-like lows,” wrote Jonathan Smoke, chief economist at Cox Automotive, an auto services company on Wednesday. “New cars could finally become more available just when most Americans can no longer afford them.”
Cox reported that new-car and used-car loan rates each rose 2 percentage points. The loan rate for new cars is 7% and for used cars it’s 11%, Cox reported.
With the exploding new car prices, used cars have gained in importance.
Cox’s Manheim Used Vehicle Value Index, which measures the prices of used vehicles sold at its US wholesale auctions, was down 3% in September compared to August and down 13% since January.
https://www.ibtimes.com.au/new-cars-are-market-out-reach-many-americans-1839322?utm_source=Public&utm_medium=Feed&utm_campaign=Distribution New cars are on the market – but out of reach for many Americans