Out of gas: Car sales plunge in April
Americans are holding on to older models as price of new vehicles go up — along with interest rates
New vehicle sales across the Houston region plunged 17 percent in April from a year ago as rising interest rates and prices drove some consumers away.
Local dealers sold 22,393 new cars, trucks and SUVs
last month, up 4.9 percent from March, but down significantly from the 26,980 vehicles sold in April 2018, according to the TexAuto Facts report from InfoNation, a Sugar Land-based automobile research firm. Nationally, new vehicle sales in April fell 2.3 percent year over year, according to the Automotive News Data Center, a Detroit-based automotive trade publication.
Fleet sales, which had buoyed new vehicle sales in recent months, also fell. New vehicle sales to corporations, car rental companies and government agencies accounted for 16.3 percent of all new vehicle sales, according to InfoNation, down from a record high 22 percent in March. Fleet sales averaged 15.2 percent of the overall new vehicle market over the past year.
Year-over-year data on fleet sales was not available.
New-car sales are falling across the country as the cost of new vehicles, particularly of popular and pricier trucks and SUVs, have soared in recent years along with auto loan interest rates. The average retail price for a new vehicle sold locally last month was $39,664, up from around $37,000 the same time last year, according to InfoNation.
Interest rates on new financed vehicles have reached a 10-year high, averaging 6.3 percent in April, compared to 5.6 percent a year ago and 4.4 percent five years ago, according to Edmunds, the automobile data provider.
“New car prices have risen dramatically over the past five years,” Pete DeLongchamps, senior vice president of manufacturer relations with Houstonbased Group 1 Automotive, said in an interview last month. “Consumers have come to realization it’s better to buy a $20,000 used vehicle versus a $35,000 new vehicle.”
Group 1, the nation’s third-largest dealership group, last month reported its dealers sold nearly 3,000 more used cars than new cars during its first quarter ended March 31, the first time used-vehicle sales surpassed new-vehicle sales in the company’s 22year history. The Houston company sold 26,390 new vehicles nationally during the first quarter, down 8 percent from the same period last year.
Rising prices and interest rates also are forcing some consumers to hold onto their vehicles for longer and skip the new car lot. The average age of a vehicle in the Houston area last year was nine years, up from 7.3 years in 2000, according to InfoNation. On average, Americans are driving their vehicles for 11 years.
Auto industry analysts predict a slight year-overyear dip in new vehicle sales this year. Automakers sold nearly 17.3 million new vehicles nationwide last year, an increase of just 0.3 percent from 2017. Industry analysts expect 16.9 million vehicles will be sold this year.