March has been a hard month for automakers, dealerships and car sellers because the car sales records reached last year couldn’t be repeated in 2017 again. The interest rates are rising but the used-vehicle prices are falling down.
Industrywide deliveries lowered to an adjusted annual pace of 16.6 million vehicles, falling short of analysts’ expectations of 17.2 million. In that report we highlighted the risks to the industry from rising rates, rising negative equity in vehicle loans and used vehicle-price deflation. This could lead to deteriorating affordability, delayed trade-in cycles, consumer shifts from new to used, diminishing credit availability and deteriorating mix/pricing.
Some key factors may be that fewer cars are being scrapped, and there are not enough new drivers to keep up with new vehicle demands.
Used-vehicle prices fell 7.7 percent in Feb., in comparison to an average fall of 3.5 percent in the first nine months of 2016
Sales for compact cars have declined while pickup truck sales have increased
Ford and General Motors may need to cut their car productions again in the second quarter and keep inventories from building up by offering more incentives.