New cars sales continue slide in July
New vehicle sales in the Houston area continued to fall in July even as interest rates slid and automakers sweetened deals to draw buyers.
Local dealers sold 22,890 new vehicles last month, a 5 percent drop from a year earlier, according to the TexAuto Facts report from InfoNation, a Sugar Land-based provider of automobile data. New truck sales fell 6 percent, while sales of new sedans fell 3 percent year over year.
Nationally, new vehicle sales were up 0.5 percent year over year, according to Edmunds, an automobile data firm. Retail auto sales are down 4 percent year to date in the Houston market, according to InfoNation.
“Just looking at the first half of the year, the numbers aren’t encouraging,” InfoNation President Dan McDowell said. “Consumer confidence is lacking a little bit.”
The sales decline came even as the average interest rate for new vehicle loans fell for the third consecutive month, hitting its lowest level so far this year. The annual percentage rate on new financed vehicles averaged 5.8 percent in July, down from 6 percent in June, according to Edmunds.
“Rising vehicle costs and high interest rates have been placing immense pressure on the new-car
market all year, so it’s nice to see shoppers get a bit of a reprieve,” said Jessica Caldwell, Edmunds’ executive director of insights. “Consumers are still in for a bit of sticker shock if they’re coming back to the market for the first time in a few years, but the fact that interest rates are trending slightly lower is helping soften the blow.”
Automakers and dealers are sweetening financing deals to move older inventory. Ford earlier this year announced zero percent financing for 72 months on its popular F-150 pickup.
More than a third of car shoppers in July got an interest rate below 4 percent, according to Edmunds.
Sales nevertheless continued to slide this summer as new vehicle prices have continued to rise, driven by consumer preference for more expensive SUVs and trucks, and ever-improving technology and safety features that have become standard in new models.
The average retail price of a new vehicle sold in the Houston area last month was $38,977, up from $38,662 in June. Sedans averaged $31,727, while SUVs and trucks averaged $41,649, according to InfoNation.
Consumers priced out of new vehicles are driving their vehicles longer or turning to the used car lot, McDowell with InfoNation said.
“Cars are made so well today, it’s nothing to have a car with over 100,000 miles,” McDowell said. “People are just keeping their cars longer.”
Local dealers expect the new vehicle market will continue to soften the rest of the year, especially with growing signs of a downturn in the national economy.
Automakers sold nearly 17.3 million new vehicles nationwide last year, an increase of just 0.3 percent from 2017.
New vehicle sales are on track to hit 16.8 million this year.