– New Car Incentives Soar 53% Amid Rising Inventories & Lackluster Demand Hint At Downturn:
Auto dealers are seeing an uptick in inventory while many consumers remain on the sidelines, deterred by the toxic combination of high interest rates and elevated inflation. In response to what seems to be a more pronounced slowdown, dealers are slashing prices and increasing incentives to stimulate demand this summer.
A new report from the Financial Times, citing data from Motor Intelligence, with manufacturers such as Hyundai, General Motors, and Volkswagen, shows that the average incentive package to sweeten the deal jumped 53% in June, compared with the same month last year.
Anytime manufacturers and dealers increase incentives, such as offering low interest rates, cash back, and price cuts to entice consumers, that’s usually an ominous sign of an alarming demand problem.
The unaffordability crisis impacting the auto market is straightforward: New car prices still linger at near record highs while the cost of financing is at the highest since the late Dot Com era. Folks still need to drive, so financing the big SUV is no longer possible. Instead, compact SUVs have become in high demand.
“If folks can put off a purchase they’re doing that, but when they do need a car, now more so than a year ago, they’re looking for ones that are less expensive because they are having to deal with higher interest rates,” said Matt Smith, deputy editor, head of automotive insights at digital auto platform CarGurus.
Data from Bankrate shows the new auto 60mo average rate most recently peaked at 8%.
* * *
PayPal: Donate in USD
PayPal: Donate in EUR
PayPal: Donate in GBP