The past decade’s historically low interest rates convinced millions of Americans to buy cars they could only afford with hyper-cheap credit. This made auto sales one of the drivers of the recovery, but it also left far too many people with underwater ‘car mortgages’ that will limit their spending on other things and prevent them from buying their next car until sometime in the 2020s.
Like all artificial (that is, credit-driven) booms, this had to end eventually, and it’s looking like now is the time:
U. S. Auto Makers Post Sharp Sales Decline in June
(Wall Street Journal) – Detroit’s car companies reported steep sales declines in June, capping a bumpy first half of the year for the U. S. auto industry and setting a bleak tone for the summer selling season.
The reports, released Monday, come as analysts expect overall auto sales to have fallen more than 2% in June compared with the prior year, according to JD Power. The firm said the industry’s selling pace hit its lowest point since 2014 over the first six months of 2017, and traffic at dealerships – measured by retail sales – fell to a five-year nadir in June.
Edmunds.com, a consumer-research company, said buyers are stretching more than ever to afford cars and trucks that are growing increasingly more expensive due to a barrage of safety gear and connectivity options. The firm estimates the average auto-loan length reached a high of 69.3 months in June, with the average amount of financing reaching $30,945, up $631 from May.
This post was published at DollarCollapse on JULY 3, 2017.
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