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Rising Automobile Sales and the Future

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?

17 thoughts on “Rising Automobile Sales and the Future

  1. moodyj20

    I think that new ride hailing services such as Uber and Lyft will cause auto sales to decrease in the coming years. As mentioned in the blog post, these services are extremely popular in urban cities because most people don't need to own their own car. They are also useful elsewhere for people who plan on drinking while away from home or people needing rides to the airport. They are more convenient than regular cab rides because one can hail an Uber or Lyft from the press of a button on their phone.
    The rise in interest rates will cause exports to decrease because they will be more expensive. This means it will be difficult to sell American vehicles overseas and it will probably decrease auto sales overall.

    Reply
    1. denatalec20

      You make a good point about how interest rates are going to affect exports of American cars. This is yet another negative impact on GDP, since we are already seeing that increased interest rates will decrease investment in cars as well as other large expenditures.

      Reply
  2. gianakosa20

    Transportation services like Uber and Lyft are already putting taxi services out of business, and have been for a few years. These ride-hailing services are also decreasing the aggregate demand for automobiles globally, especially in big cities, where driving and parking are both onerous tasks. They are limiting the need for consumers to purchase automobiles, and I think they will continue to for the next few years.

    But as a disclaimer, I think that only human-operated automobile sales will drop. Autonomous cars that do not require drivers are just being introduced, but will likely take over the global automobile industry in the next decades. If driverless cars are a success, autonomous auto sales would go up, but services like the afore mentioned Lyft and Uber might see a decline in sales.

    Reply
    1. laniere20

      Your point about cars that do not require human drivers is interesting to think about. Though these cars have been introduced, i feel as though they will take a generous amount of time to take off. Consumers will predictably be nervous to trust a car in which they have no control. But, once these cars do catch on, do you think that they will but service such as Uber and Lyft out of business?

      Reply
  3. mitchelld20

    I think services like uber and lyft will definitely play a factor in whether or not the sales of automobiles will continue to increase, however, there will always be a demand for people to own cars. Living in lexington, virginia, for example, there is little to no demand for uber because if you are going to drive anywhere its going to be an expensive uber ride, so over time you would save a lot more money if you just had your own car. On the other hand, an increase to interest rates could make it harder for people to purchase cars, so that working in conjunction with services like uber and lyft could be enough to send automobile sales on a downward trend.

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  4. laniere20

    As ride-hailing series such as uber continue to grow in popularity, i think that the sales of automobiles will continue to decrease. These services are more convenient because you only have to pay for the car when you need the ride, and do not have to deal with parking spots, which are a pain in big cities. Additionally, with the nerves regarding global warming, we are encouraged to carpool whenever possible. These services provide avenues for strangers to share a car service, such as uber pool. For these reasons I believe the auto industry will begin o decline as services such as Uber begin to take over.

    Reply
    1. gianakosa20

      I think it's interesting you bring up global warming. I know carpooling is encouraged, but does the populous actually take this request seriously? I'm not sure this is an actual factor that causes a decline in auto sales.

      Reply
    2. denatalec20

      I think the growth of big cities is an excellent consideration. In cities like New York, few people have cars because parking is a pain and traffic is horrendous. As other cities continue to grow, they will experience the same phenomenon.

      Reply
  5. Chris Randall

    Even though taxi companies are trying to fight back against companies such as Uber, there will always be more and more companies like Uber popping up. As these "driving services" spread outside large metropolitan areas, car companies will begin to see a decline in sales prices. Cheap and affordable pick up and drop off driving services help consumers save money on gas and buying a car themselves.
    In the future when autonomous cars become the norm, companies that are flourishing right now (Uber, Lyft, etc.) will begin to lay off drivers for autonomous automobiles. In turn, car companies will see an increase in sales once again.

    Reply
  6. denatalec20

    A rise in interest rates will cause a decrease in car purchases. Most people do not have cash readily available to pay sticker price of a car the day they drive it home from the dealership. If it is more expensive to borrow money, less people will be buying cars. Potential buyers will be further dissuaded by the fact that there are other transportation options, like Uber, so readily available.

    Reply
  7. shenr20

    As for the globel warming issue, a new energy automobiles turns out to be the key problem which government pays much attention. All the big heads have their own R&D plan for new energy automobiles. Low-carbon economy and new energy automobile have been the major topics around the world in recent years, governments are competing to regulate subsidizing policies for new energy automobiles. New energy automobiles will definitely be the next revolution in automobile market. There is still huge potential for the automobile market to increase in sales.

    Reply
  8. mcconnellm20

    I think that companies such as Uber and Lyft are leaving a huge impact on the automobile industry. With companies like Uber, people can get safe and fairly reasonably priced rides from one place to another. Services like Uber make it easy for people to get rides. These services are particularly popular in big cities where people walk from place to place or just use a taxi. With services like Uber, people who live in places like New York City and Los Angeles might begin to see more negatives than positives in terms of owning a car. There are many benefits to Uber. You do not have to worry about parking your car or paying for car insurance. Things like this are what make companies like Uber so attractive. I think that the increase in interest rates is going to decrease auto sales because are going to have less disposable income to spend.

    Reply
  9. andersons20

    This graph provides an intriguing development to the trends of automobile sales. I believe that companies' benefits for public transportation and the cost/accessibility of public transportation and services such as Uber and Lyft will play the biggest role going forward in automobile sales. This summer the company that I worked for provided me with a commuting card, which allowed me to pay for public transportation and Uber and Lyft in an effort to help drive down traffic congestion and environmental impacts. Once this card ran out and I was left with a choice, I found that driving my own vehicle was not only more expensive but less time efficient. This leads me to believe that in urban areas automobile sales will decrease, but outside of urban areas automobile sales will remain constant.

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  10. patelp20

    I think that automobile sales are very volatile and react very much to long term expectations rather than short term expectations just because of the nature of paying off car loans. I do think that as the economy ages, and I mean in the far future, that automobile sales will decrease and be replaced by different means of transportation. However I do not think that the next rate hikes by the fed will alter sales. I do think that if the public comes to believe that interest rates are going to continue to rise to a dramatic degree, then we would see sales fall.

    Reply
  11. Robert Griffin

    In terms of Uber, new regulations on their company may limit their expansion into more rural regions. In big cities there has been easy access to public transportation such as buses and trains, along with the long-established major taxi companies. This has already driven the demand for cars in these areas down and it is hard to see Uber being the straw that broke the camel's back for other people to not buy a car in a city when there already has been so many different types of public transportation. For that reason I do not believe new age ride hailing services will affect the auto industry in a significant way.

    Reply
  12. compolir20

    Realistically I think the public transportation services like Uber and Lyft are the largest driving force of change in the auto industry outside of gas. The electric car market has taken a fairly large hit in the eyes of the public following the Tesla Model 3. According to an article published by Fortune (http://fortune.com/2017/05/26/uber-lyft-people-ditching-cars/) nearly a quarter of U.S. citizens who own cars are trading in or selling their vehicles this year. According to a poll 9% of them cite Uber and Lyft as their primary form of transportation.

    Reply
  13. smithg20

    While I agree that ride hailing services such as Uber and Lyft have affected and will continue to affect the United States' culture towards the automotive industry, it is not clear it's effect on the economics of the industry. While popularity has grown for these services, there have also been a number of scandals and problems regarding regulation of these new companies that at times have overpowered the companies' effectiveness. Also, with these ride hailing services simply growing in recent years, many would argue that automotive sales would increase as more individuals might choose to seek employment in this new industry.

    Reply

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