Cox Automotive reported Thursday that used car sales slipped in August, after a report early this month that new car sales were flat.
This time, it’s not just stock. Cox Automotive said the slowdown was starting to reflect higher payments caused by higher prices and higher interest rates.
Cox Automotive estimated this total used car sales In August it was near 3.1 million units, down 11.4% from August 2021. The seasonally adjusted annual rate (SAAR), or sales velocity, is estimated to be near 36.2 million, down from last August’s level of 40.8 million and below July’s revised rate of 38.3 million pace .
“Higher prices and higher interest rates are slowing used market sales,” said Charles Chesbro, chief economist at Cox Automotive. “Used car sales will face increasing headwinds throughout 2022 as rising interest rates continue to slow economic activity.”
Although auto loan production figures are not available from the credit union, balances reported by KUNA showed that credit unions hold about twice as much used car loans as new ones. Together, they made up about a third of all credit union loans.
It was the latest Canadian News Agency (KUNA) data for July, which showed that used auto loans reached $300.8 billion on July 31, up 18.5% from a year earlier, and up 1.4% from June. New auto loans grew 17.3% to $167.7 billion from the previous year and were up 1.9% from the previous month.
Cox reported that retail sales of used cars, which exclude sales of private parties, fell to 19.1 million in August from a revised level of 20.2 million in July. They are down 11.4% from last year.
Year-to-date, the total used market is currently on track to end the year down more than 12% from the 40.6 million recorded in 2021.
The US Bureau of Economic Analysis reported on September 2 that the SAAR rate for new cars and light trucks was 13.2 million in August, down from 13.3 million in July and up from 13.1 million in August 2021.
Cox Automotive reported Thursday that U.S. supply of unsold new cars reached 1.23 million units at the end of August, up 31% from a year earlier. In the middle of 2021, the global shortage of computer chips began to limit production.
“Available supply is at the highest level in our data since June 2021,” Chesbro said. However, it is well below historical levels. Production cannot catch up with demand yet.”
Cox Automotive also reported Thursday that the affordability of new cars fell again in August as new car prices hit new records and car loan rates reached their highest level in more than 10 years.
The average deal price for new cars hit another record in August: $48,301, up $222, or 0.5%, from July, and $4,712, or 10.8%, as of August 2021.
Cox Automotive said it expects prices to remain elevated due to continued high demand, low inventories and record low incentives. In addition, luxury cars account for a record 18% of new car sales, as automakers continue to prioritize computer chips available for high-margin, high-end models over entry-level vehicles.
Incentives decreased slightly in August versus July and remained low, at just 2.3% of the average transaction price. A year ago, incentives averaged 5.5% of prices paid.
Cox Automotive estimated that more than half of buyers would need to set aside 42.6 weeks of their salary to purchase the average new car in August, up from an average of 42.2 weeks in July and up 14% from the previous year.
While median income grew 0.4% from July to August, all other factors moved against affordability. Along with higher prices and lower stimulus, interest rates have also increased by an average of 37 basis points.
As a result of these moves, the estimated typical monthly payment increased 1.4% to $743.
#Higher #prices #rates #put #pressure #car #sales