Expect Big Discounts: Car Dealers Complain "We're Full"

After a long sales boom, dealers are struggling to sell cars.

New models are on the way but the Lots are Full Car Dealers Say.

“We are turning down cars and are being more picky on the cars we stock,” said Brian Benstock, general manager of Paragon Honda in New York City. “We just can’t take more. We’re full.”

New car sales have been slumping in many of the world’s major auto markets. In China, sales were down more than 12 percent in the first six months of the year.

In the United States, after many years of strong sales, many consumers are driving vehicles that don’t need to be replaced. Newer cars and trucks tend to be more durable and hold up longer than cars made even a decade or two earlier. At the same time, the average price of new vehicles has risen to around $35,000, while interest rates on auto loans have edged higher. That means people have to be willing and able to spend more to buy a new car than they were just a few years ago.

“It’s a double whammy,” said Mike Jackson, chairman of AutoNation, the nation’s largest chain of new-car dealerships. “Customers are having monthly payment shock.”

The slump in car sales has already forced some companies to cut production and jobs. General Motors recently stopped making cars at a plant in Lordstown, Ohio, that made the Chevrolet Cruze and is winding down manufacturing at another factory in Detroit. Honda recently ended a shift at its plant in Marysville, Ohio, that makes its Accord sedan and other models.

What is perhaps most worrying for the industry is that sales of larger vehicles — S.U.V.s and trucks — that had more than made up for a recent collapse in purchases of sedans, are showing signs of strain.

Despite declining car sales manufacturers kept of profits by selling more expensive SUVs but the boom is now over

Trump won the 2016 election with help from rust-belt states. Now manufacturers are scaling back production on Michigan and Ohio.

Expect this trend to accelerate.

Mike "Mish" Shedlock

Comments (24)
No. 1-18
Casual_Observer
Casual_Observer

This has been a secular trend since the last recession. Millenials just need a new smartphone to do anything. Per use is the way of the future.

Mish
Mish

Editor

Correct C-O Lot of these big SUV sales are from retiring boomers feeling great about the stock market

Dan Salt
Dan Salt

Market never fully recovered post 2008 in the West. Younger people don't want the fixed costs that come with cars. The internet and delivery systems make them less necessary in many urban environments. Robotic cars and the decline as cars as status symbols means the industry is probably going to need large scale restructuring. Sadly a lot of people are and will lose their jobs.

shamrock
shamrock

The problem is there are years of these anecdotes, and then the sales numbers come out and they are just fine. Recession indicators are flashing like crazy all the time but the GDP comes out and it's 2.1, 3.1.

FDCROSS3853
FDCROSS3853

The price of new cars is outrageous!! GM wants $100k or more for a truck or SUV!! They are overpriced and depreciate to less than half that in 4 years!! I'd rather walk than pay that much money for one of their boring vehicles!! Two of my cars are 2005 Mopars. I'd rather push a Dodge than drive a Chevy!!