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US Auto Sales Lose Steam Amid Price Pressure

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Bloomberg Jul 2 10:48 · 25.1k Views

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  • 00:00 Keith,
  • 00:01 there was a lot of pent up demand and people went out to buy cars before the tariffs took effect.
  • 00:05 And now we're in the mode where reality is setting in.
  • 00:09 Yeah, it's time to pay the piper for that springtime sales surge that we saw
  • 00:13 when people were rushing out to get cars before the
  • 00:16 tariffs increased prices.
  • 00:17 So
  • 00:18 April was gangbusters.
  • 00:19 May was still pretty good.
  • 00:21 June kind of hit the floor.
  • 00:23 So that's that is the new reality in the auto market.
  • 00:26 Things are slowing down from here.
  • 00:28 In terms of the
  • 00:29 car makers that did report, who is looking good right now positioning wise in terms of
  • 00:34 GM for Toyota,
  • 00:37 well,
  • 00:38 those 3 all had good
  • 00:40 quarters with sales up quite a bit,
  • 00:42 but
  • 00:43 all three of them moderated in,
  • 00:45 in June.
  • 00:46 Toyota, for example, was basically flat on sales growth
  • 00:49 in June.
  • 00:50 But
  • 00:51 so
  • 00:52 going forward, we're going to see more price increases because the tariff impact will be hitting
  • 00:57 and and consumers are already
  • 01:00 nervous about the economy.
  • 01:02 They don't like the average price of a new car approaching $50,000.
  • 01:05 So it's going to be a tougher market in the second-half.
  • 01:08 Absolutely.
  • 01:09 And of course,
  • 01:11 tariffs top of everyone's mind.
  • 01:13 Are automakers employing any kind of incentives to
  • 01:16 encourage people to to buy their cars even after the tariffs take effect?
  • 01:20 It'll be interesting to see how that plays out.
  • 01:22 You know, Ford has had this
  • 01:23 employee discount for everyone
  • 01:25 program going.
  • 01:26 So has Stalantis, the owner of Jeep and Ram.
  • 01:29 But that is ending here
  • 01:31 over the next week.
  • 01:32 So
  • 01:33 as we enter the second-half,
  • 01:35 it'll be interesting to see how much profit the automakers want to give away to keep sales going.
  • 01:41 In general, when you talk to industry analysts, how much of the tariffs are these automakers passing along to consumers?
  • 01:48 Yeah, Alex Partners just put out a study saying that
  • 01:52 80% of the tariff costs will be passed along to consumers.
  • 01:56 And that will equate to an almost $2000 per car price increase, which could really slow the market.
  • 02:04 Yeah, especially when the price,
  • 02:05 the average price of a new car is somewhere in the neighborhood of 50,000.
  • 02:09 That's right.
  • 02:10 And the average car payment is now $747
  • 02:13 a month.
  • 02:15 More people are taking out seven-year loans.
  • 02:17 In fact,
  • 02:18 one out of five car buyers now pay over $1000 a month for their car payment.