Five warning signs for auto industry

Five warning signs for auto industry

And yet, the Automotive Forum hosted by NADA, J.D. Power and the New York Auto Show presented some warning signs for the industry, according to Nathan Bomey of USA Today. Most have been reported in the past few months in the WANADA Bulletin.

« Negative equity. The number of auto buyers –upside down” in their vehicle financing is set to hit a 10-year high this year, according to J.D. Power, as nearly one-third of buyers will owe more on their car than it is worth.

« Increase in subprime. The percentage of subprime buyers will reach 17.5 percent this year, says J.D. Power, a nine-year high.

« Longer loans. For some buyers, the only way to afford a new car at the increasingly high price is to stretch the loan out over more months. Six-year loans now account for more than one-third of sales. Such terms will either keep consumers out of the market longer or increase their negative equity, making it harder for some to ever dig out.

« Millennials less interested in cars. Recent research of this well-studied topic, reported on in the Bulletin, has shown that this statement is not as straightforward as once thought. As millennials grow older, have children and move out of cities where owning a car is unnecessary, they are more interested in buying their own cars. And their younger counterparts, Gen Z, are even more interested in car ownership, as the Bulletin reported last week.

« Increase in fleet sales. These are less profitable for both manufacturers and dealers, even as they pump up sales figures. Some manufacturers such as GM have made a deliberate effort to scale back on fleets.

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