In recent years, due to a multitude of factors, auto sales are up. One of the first factors that we considered is interest rates are at historically low levels. Because of these historically low rates, consumers have been financing new car purchases for cheap. There also may be a correlation between the falling unemployment rates and the rise in automobile purchases. As more people become employed, more people commute to work and need a car to do so. Furthermore, gas prices have been low which could also possibly correlate to a rise in automobile purchases. More people can afford to pay for gasoline and therefore more consumers will be in the market to purchase a vehicle. If you look at the very end of the auto sales line, there is a small drop off in recent years. Around the same time period, the graph shows bank prime loan rates beginning to rise. Moving forward, it will be interesting to see how these two factors (bank prime loan rates, and ride-hailing services) continue to affect the sale of cars in the United States. Passenger-car models are becoming less favorable. Instead of buying smaller sedans and convertibles, consumers are now purchasing larger sports vehicles and trucks. Therefore, more cars are being sold leading to more profits for automakers.
Autonomous cars and the rise of ride-hailing services have already begun to make an impact and have the potential to change the auto industry dramatically. New ride-hailing services are expected to drop annual growth of auto sales by about 3.6 percent in the coming years. In dense, urban areas, with cheap ride-hailing services, there is little need to own a car.
Do you think the economy will continue to see an increase in the sale of automobiles or will ride-hailing services like uber take over?
What do you think the next potential interest rate hike will do to new automobile sales?