Auto makers enjoyed a six-year run of increasing passenger vehicle sales, but the gravy train is pulling into the station. In March, sales fell 1.6 percent.
“If you only look at the sales numbers, it could be tempting to say that the industry is just as strong as it was a year ago,” said Jessica Caldwell, Edmunds executive director of industry analysis. “But there are several areas of concern this year lurking just below the surface. Inventories have reached levels not seen in more than a decade, and incentives are rising. We’re also seeing an increase in loan duration and indications of an increase in subprime lending, both of which demonstrate sales aren’t coming as easily as they used to.”
Auto makers spent $441 more to sell a car in March compared with a year ago, according to Edmunds. Still, the average transaction price for a vehicle sold in the U.S. in March was $34,342 -- almost $600 more than the same month last year, according to Kelley Blue Book.
U.S. car sales peaked at 17.55 million last year, but they are unlikely to sustain that level through the end of 2017. Earlier this week, Deutsche Bank issued a report saying the industry was under a triple threat of rising interest rates, rising negative equity in vehicle loans and softening used car prices.
What that means for consumers is that it could be a good time to buy, especially a used car. Used car prices declined eight percent in February.