Buyers are starting to shy away from new cars, a worrying sign for the auto industry.
With shortages, inflation and huge dealer markups, buying new cars has become unprofitable. The American agency GfK AutoMobility confirms this in its research.
Given these rampant issues, it’s no wonder some buyers are hitting the brakes and rethinking the need to buy a new car.
According to GfK AutoMobility statistics from July, 57% of consumers have no intention of buying a new car. This is the highest level since 2016, and the report notes that some of the most important demographic groups are turning away from new cars.
Among likely Gen Y and Gen X buyers, ages 25-42 to 43-57, only 37% plan to buy a new car in the next two years. This is 8% less than in July 2020, and GfK AutoMobility noted that ‘the levels are similar for those intending to buy a new or used car in the next 3 months, 6 months or 1 year’.
Interestingly, both middle-income and high-income consumers are turning away from new cars. For 3-month earners between $50,000 and $100,000 per year, only 44% plan to buy a new car, down 10% from 2020. This corresponds to a 10% increase in those looking to buy a used car.
Households earning $150,000 or more also show less interest in new cars, with only 72% of those intending to buy a new car in 3 months. While this is significantly higher than in lower income groups, it is still a 5% drop since January this year.
Additionally, 21% of those earning between $100,000 and $150,000 are looking exclusively for used cars. Another 19% equally consider new and used cars.
The report also notes that consumer sentiment is bleak, with only 21% believing that now is a good time to buy a car. This level has not been seen since the Great Recession, and most consumers believe that it is a good time to wait.
This is not the only warning sign for the automotive industry, as customers are even moving away from full-size pickup trucks (FSPs) – both in the short and long term. Gfk AutoMobility noted that this is ‘the first reversal in the seemingly unstoppable growth of FSP over the past 2 years.’
Julie Kenard, senior vice president of GfK AutoMobility, said, ‘Consumers buying new cars are the lifeblood of the auto industry,’ but ‘customers cannot tolerate so many negative factors at once — gas prices, inflation and the highest new car prices on record.’ industry’.
