Jonathan Smoke, chief economist for researcher Cox Automotive told Bloomberg: “We’ve seen a big reduction in median- and lower-income households” buying new cars, which now “almost exclusively go to the top 20% of income households.”He continued: “The new norm for the industry because of reduced affordability is closer to 16 million. We’ve lost about 10% of the buying pool.”The tough end to 2023 is expected to continue into 2024, the report says. Cox predicts that auto sales would be up less than 2% in the forthcoming year, meaning that the U.S. won’t top its 17 million sales figure — which it posted five years prior to the pandemic — anytime soon. 
And the report notes that automakers aren’t in a rush to cut prices because they are happy moving less metal at higher margins:
Consumer spending on new vehicles reached a record $578 billion in 2023, its third consecutive year exceeding a half-trillion dollars, according to researcher J.D. Power. Consumers’ average monthly car payment in December was estimated to be $739, up $9 from a year earlier, J.D. Power said.
Smoke added: “Unless the industry finds a way to get back to more-affordable price points, we will see products that cater to higher income, higher credit-quality consumers. And that ultimately limits sales volumes.”More By This Author:Has The Global Food Inflation Crisis Been Averted?Dollar Off To Best Start To A Year Since 2005ECB Rate-Cut Odds Tumble As EU Inflation Re-Accelerates In December
