The Real Reason Car Sales Are Falling
The Real Reason Car Sales Are Falling
It’s been a rough few months in Detroit. After seven years of gangbuster sales, the U.S. auto market is skidding badly.
The American car and truck segment is remarkably effortless to get a treat on, but a look at some of its indicators may induce some head-scratching. For the past twenty years, the number of licensed drivers has ticked up by about two million a year (Uber and Lyft have failed to dent that). Likewise, the number of registered vehicles has climbed by about three million annually.
Sure, there are aberrations, but given those numbers and today’s economy—with a strong labor market, relatively affordable financing, and cheap gas—it’s reasonable to ask why, then, are car sales tanking?
“These are not secrets,” said Bloomberg Intelligence analyst Kevin Tynan. “It’s not like nobody knew we were late in the cycle.”
Americans still tend to own slightly more than one vehicle apiece, but they are keeping those vehicles longer. The average car or truck on U.S. roads today was made in 2005. They’re still on the road because, well, they’re still on the road. Vehicles made in the past fifteen to twenty years are vastly more reliable than their predecessors. The U.S. auto industry is in a pickle, in part, because it did too good of a job.
Meantime, the accelerating tempo of innovation may be making things even worse. With each advancement in electrical powertrains and autonomous driving, it’s lighter to envision a game-changing machine, the prospect of which shifts some would-be buyers into the wait-and-see category. Why buy a fresh car now when the car of your fantasies is just over the horizon?
A two thousand seventeen Toyota Camry, for example, still isn’t vastly different from the two thousand seven iteration. Someone driving the early model, however, may figure a two thousand twenty Camry will drive itself and zip around on electrons.  This is one of the main reasons why the lease rate in the U.S. has crept up to almost one-third, according to Tynan. Customers worried about a machine quickly becoming obsolete are choosing a three-year loaner rather than an outright purchase.
Car executives, of course, know this better than anyone, and no one in the C-suites of MoTown was most likely astonished by the latest sales numbers. It’s just that braking is no joy. Heeding to a slowing market means handing out pink slips. And then there is swagger to account for. The right mix of vehicles—a hot fresh SUV, or an electrical wish pod that emerges in the desert—could be just the thing to buck a cyclical downturn.
“The way the industry has always worked, you get all you can get while you can,” Tynan said. “When the industry shifts gears, then you deal with it.”
Companies like Ford and GM have many levers to pull to avoid a disaster—namely, a mix of lowering production and raising incentives to lure drivers back to the dealership.
“They’re going to find a way to deal with it, until they get kind of right-sized on production,” Tynan said. “Basically, it’s a question of how soft do you want to land?” In the meantime, it’s a superb time to get a deal on a fresh car.
The Real Reason Car Sales Are Falling
The Real Reason Car Sales Are Falling
It’s been a raunchy few months in Detroit. After seven years of gangbuster sales, the U.S. auto market is skidding badly.
The American car and truck segment is remarkably effortless to get a treat on, but a look at some of its indicators may induce some head-scratching. For the past twenty years, the number of licensed drivers has ticked up by about two million a year (Uber and Lyft have failed to dent that). Likewise, the number of registered vehicles has climbed by about three million annually.
Sure, there are aberrations, but given those numbers and today’s economy—with a strong labor market, relatively affordable financing, and cheap gas—it’s reasonable to ask why, then, are car sales tanking?
“These are not secrets,” said Bloomberg Intelligence analyst Kevin Tynan. “It’s not like nobody knew we were late in the cycle.”
Americans still tend to own slightly more than one vehicle apiece, but they are keeping those vehicles longer. The average car or truck on U.S. roads today was made in 2005. They’re still on the road because, well, they’re still on the road. Vehicles made in the past fifteen to twenty years are vastly more reliable than their predecessors. The U.S. auto industry is in a pickle, in part, because it did too good of a job.
Meantime, the accelerating rhythm of innovation may be making things even worse. With each advancement in electrified powertrains and autonomous driving, it’s lighter to envision a game-changing machine, the prospect of which shifts some would-be buyers into the wait-and-see category. Why buy a fresh car now when the car of your desires is just over the horizon?
A two thousand seventeen Toyota Camry, for example, still isn’t vastly different from the two thousand seven iteration. Someone driving the early model, however, may figure a two thousand twenty Camry will drive itself and zip around on electrons.  This is one of the main reasons why the lease rate in the U.S. has crept up to almost one-third, according to Tynan. Customers worried about a machine quickly becoming obsolete are choosing a three-year loaner rather than an outright purchase.
Car executives, of course, know this better than anyone, and no one in the C-suites of MoTown was most likely astonished by the latest sales numbers. It’s just that braking is no joy. Heeding to a slowing market means handing out pink slips. And then there is swagger to account for. The right mix of vehicles—a hot fresh SUV, or an electrical desire pod that emerges in the desert—could be just the thing to buck a cyclical downturn.
“The way the industry has always worked, you get all you can get while you can,” Tynan said. “When the industry shifts gears, then you deal with it.”
Companies like Ford and GM have many levers to pull to avoid a disaster—namely, a mix of lowering production and raising incentives to lure drivers back to the dealership.
“They’re going to find a way to deal with it, until they get kind of right-sized on production,” Tynan said. “Basically, it’s a question of how soft do you want to land?” In the meantime, it’s a fine time to get a deal on a fresh car.
The Real Reason Car Sales Are Falling
The Real Reason Car Sales Are Falling
It’s been a rough few months in Detroit. After seven years of gangbuster sales, the U.S. auto market is skidding badly.
The American car and truck segment is remarkably effortless to get a treat on, but a look at some of its indicators may induce some head-scratching. For the past twenty years, the number of licensed drivers has ticked up by about two million a year (Uber and Lyft have failed to dent that). Likewise, the number of registered vehicles has climbed by about three million annually.
Sure, there are aberrations, but given those numbers and today’s economy—with a strong labor market, relatively affordable financing, and cheap gas—it’s reasonable to ask why, then, are car sales tanking?
“These are not secrets,” said Bloomberg Intelligence analyst Kevin Tynan. “It’s not like nobody knew we were late in the cycle.”
Americans still tend to own slightly more than one vehicle apiece, but they are keeping those vehicles longer. The average car or truck on U.S. roads today was made in 2005. They’re still on the road because, well, they’re still on the road. Vehicles made in the past fifteen to twenty years are vastly more reliable than their predecessors. The U.S. auto industry is in a pickle, in part, because it did too good of a job.
Meantime, the accelerating rhythm of innovation may be making things even worse. With each advancement in electrical powertrains and autonomous driving, it’s lighter to envision a game-changing machine, the prospect of which shifts some would-be buyers into the wait-and-see category. Why buy a fresh car now when the car of your wishes is just over the horizon?
A two thousand seventeen Toyota Camry, for example, still isn’t vastly different from the two thousand seven iteration. Someone driving the early model, however, may figure a two thousand twenty Camry will drive itself and zip around on electrons.  This is one of the main reasons why the lease rate in the U.S. has crept up to almost one-third, according to Tynan. Customers worried about a machine quickly becoming obsolete are choosing a three-year loaner rather than an outright purchase.
Car executives, of course, know this better than anyone, and no one in the C-suites of MoTown was most likely astonished by the latest sales numbers. It’s just that braking is no joy. Heeding to a slowing market means handing out pink slips. And then there is swagger to account for. The right mix of vehicles—a hot fresh SUV, or an electrified wish pod that shows up in the desert—could be just the thing to buck a cyclical downturn.
“The way the industry has always worked, you get all you can get while you can,” Tynan said. “When the industry shifts gears, then you deal with it.”
Companies like Ford and GM have many levers to pull to avoid a disaster—namely, a mix of lowering production and raising incentives to lure drivers back to the dealership.
“They’re going to find a way to deal with it, until they get kind of right-sized on production,” Tynan said. “Basically, it’s a question of how soft do you want to land?” In the meantime, it’s a good time to get a deal on a fresh car.
The Real Reason Car Sales Are Falling
The Real Reason Car Sales Are Falling
It’s been a raunchy few months in Detroit. After seven years of gangbuster sales, the U.S. auto market is skidding badly.
The American car and truck segment is remarkably effortless to get a treat on, but a look at some of its indicators may induce some head-scratching. For the past twenty years, the number of licensed drivers has ticked up by about two million a year (Uber and Lyft have failed to dent that). Likewise, the number of registered vehicles has climbed by about three million annually.
Sure, there are aberrations, but given those numbers and today’s economy—with a strong labor market, relatively affordable financing, and cheap gas—it’s reasonable to ask why, then, are car sales tanking?
“These are not secrets,” said Bloomberg Intelligence analyst Kevin Tynan. “It’s not like nobody knew we were late in the cycle.”
Americans still tend to own slightly more than one vehicle apiece, but they are keeping those vehicles longer. The average car or truck on U.S. roads today was made in 2005. They’re still on the road because, well, they’re still on the road. Vehicles made in the past fifteen to twenty years are vastly more reliable than their predecessors. The U.S. auto industry is in a pickle, in part, because it did too good of a job.
Meantime, the accelerating tempo of innovation may be making things even worse. With each advancement in electrical powertrains and autonomous driving, it’s lighter to envision a game-changing machine, the prospect of which shifts some would-be buyers into the wait-and-see category. Why buy a fresh car now when the car of your fantasies is just over the horizon?
A two thousand seventeen Toyota Camry, for example, still isn’t vastly different from the two thousand seven iteration. Someone driving the early model, however, may figure a two thousand twenty Camry will drive itself and zip around on electrons.  This is one of the main reasons why the lease rate in the U.S. has crept up to almost one-third, according to Tynan. Customers worried about a machine quickly becoming obsolete are choosing a three-year loaner rather than an outright purchase.
Car executives, of course, know this better than anyone, and no one in the C-suites of MoTown was most likely astonished by the latest sales numbers. It’s just that braking is no joy. Heeding to a slowing market means handing out pink slips. And then there is swagger to account for. The right mix of vehicles—a hot fresh SUV, or an electrical desire pod that shows up in the desert—could be just the thing to buck a cyclical downturn.
“The way the industry has always worked, you get all you can get while you can,” Tynan said. “When the industry shifts gears, then you deal with it.”
Companies like Ford and GM have many levers to pull to avoid a disaster—namely, a mix of lowering production and raising incentives to lure drivers back to the dealership.
“They’re going to find a way to deal with it, until they get kind of right-sized on production,” Tynan said. “Basically, it’s a question of how soft do you want to land?” In the meantime, it’s a good time to get a deal on a fresh car.