Despite mixed economic data, several factors have car dealers scrambling to restock inventory
LOS ANGELES--Sept. 27, 2013: Blair Stover has chronicled a new circumstance that is limiting sales growth in the American auto industry. A buying frenzy has left car dealers with minimal inventory as consumers clamor for particular models in high demand. While broad economic data remains mixed, Blair Stover notes that several factors are spurring consumers to buy a select group of cars at record high prices.
A low interest rate environment is cited to be pivotal in helping Americans justify the expense and commitment of a new vehicle. Blair Stover points to a 14% year-over-year increase in light truck and car sales for the month of August being greatly attributed to affordable monthly payments that stem from low APR (Annual Percentage Rate) financing.
The positive impact of low APR rates on car sales in uncertain economic times is separately noted by the Wall Street Journal in a September 2nd, 2013 article. The inelastic demand has driven up prices on popular models such as the Ford Fusion, Chevrolet Impala and Nissan Sentra, according to findings from Blair Stover.
These price hikes are in stark contrast to an overall decline of 0.8% in year-over-year car prices, as reported by TrueCar, an automotive shopping site.
A broader trend in car preferences has been affirmed by the supply shortages. The common denominators of fuel efficiency, utility and ample standard features are attracting buyers in droves to small or mid-size sedans. Smaller sport utility vehicles (SUVs) also rank high on many car shopping lists.
Meanwhile, Blair Stover points to a mounting surplus and big rebates on large SUVs, sports cars and pickup trucks going mostly unnoticed by American car buyers. He forecasts that automakers will continue to allocate their production resources to economical and fuel efficient vehicles for the foreseeable future.