Wall Street Says BUY GOLD, But...

While markets wobble, gold keeps smashing records-and banks say it's just beginning. Goldman urges "buy gold" to hedge trade wars; JPMorgan plans $6,000 an ounce and just took delivery of $4 billion in bullion. Yet past bull runs saw 13x-1,000x bigger gains without buying more gold.

Lower-priced new cars are gaining popularity, and not just for cash-poor buyers

TOM KRISHER
October 22, 2024

DETROIT (AP) -- Had she wanted to, Michelle Chumley could have afforded a pricey new SUV loaded with options. But when it came time to replace her Chevrolet Blazer SUV, for which she'd paid about $40,000 three years ago, Chumley chose something smaller. And less costly.

With her purchase of a Chevrolet Trax compact SUV in June, Chumley joined a rising number of buyers who have made vehicles in the below-average $20,000-to-$30,000 range the fastest-growing segment of the nation's new-auto market.

"I just don't need that big vehicle and to be paying all of that gas money," said Chumley, a 56-year-old nurse who lives outside Oxford, Ohio, near Cincinnati.

Across the industry, auto analysts say, an "affordability shift" is taking root. The trend is being led by people who feel they can no longer afford a new vehicle that would cost them roughly today's average selling price of more than $47,000 -- a jump of more than 20% from the pre-pandemic average.

To buy a new car at that price, an average buyer would have to spend $737 a month, if financed at today's average loan rate of 7.1%, for just under six years before the vehicle would be paid off, according to Edmunds.com, an auto research and pricing site. For many, that is financially out of reach.

Yet there are other buyers who, like Chumley, could manage the financial burden but have decided it just isn't worth the cost. And the trend is forcing America's automakers to reassess their sales and production strategies. With buyers confronting inflated prices and still-high loan rates, sales of new U.S. autos rose only 1% through September over the same period last year. If the trend toward lower-priced vehicles proves a lasting one, more generous discounts could lead to lower average auto prices and slowing industry profits.

"Consumers are becoming more prudent as they face economic uncertainty, still-high interest rates and vehicle prices that remain elevated," said Kevin Roberts, director of market intelligence at CarGurus, an automotive shopping site. "This year, all of the growth is happening in what we would consider the more affordable price buckets."

Under pressure to unload their more expensive models, automakers have been lowering the sales prices on many such vehicles, largely by offering steeper discounts. In the past year, the average incentive per auto has nearly doubled, to $1,812, according to Edmunds. General Motors has said it expects its average selling price to drop 1.5% in the second half of the year.

Through September, Roberts has calculated, new-vehicle sales to individual buyers, excluding sales to rental companies and other commercial fleets, are up 7%. Of that growth, 43% came in the $20,000-to-$30,000 price range -- the largest share for that price category in at least four years. (For used vehicles, the shift is even more pronounced: 59% sales growth in the $15,000-to-$20,000 price range over that period.)

Sales of compact and subcompact cars and SUVs from mainstream auto brands are growing faster than in any year since 2018, according to data from Cox Automotive.

The sales gains for affordable vehicles is, in some ways, a return to a pattern that existed before the pandemic. As recently as 2018, compact and subcompact vehicles -- typically among the most popular moderately priced vehicles -- had accounted for nearly 35% of the nation's new vehicle sales.

The proportion started to fall in 2020, when the pandemic caused a global shortage of computer chips that forced automakers to slow production and allocate scarce semiconductors to more expensive trucks and large SUVs. As buyers increasingly embraced those higher-priced vehicles, the companies posted robust earnings growth.

In the meantime, they deemed profit margins for lower-prices cars too meager to justify significant production of them. By 2022, the market share of compact and subcompact vehicles had dropped below 30%.

This year, that share has rebounded to nearly 34% and rising. Sales of compact sedans were up 16.7% through September from 12 months earlier. By contrast, CarGurus said, big pickups rose just under 6%. Sales of large SUVs are barely up at all -- less than 1%.

Ford's F-Series truck remains the top-selling vehicle in the United States this year, as it has been for nearly a half-century, followed by the Chevrolet Silverado. But Stellantis' Ram pickup, typically No. 3, dropped to sixth place, outpaced by several less expensive small SUVs: the Toyota RAV4, the Honda CR-V and the Tesla Model Y (with a $7,500 U.S. tax credit).

The move in buyer sentiment toward affordability came fast this year, catching many automakers off guard, with too-few vehicles available in lower price ranges. One reason for the shift, analysts say, is that many buyers who are willing to plunk down nearly $50,000 for a new vehicle had already done so in the past few years. People who are less able -- or less willing -- to spend that much had in many cases held on to their existing vehicles for years. The time had come for them to replace them. And most of them seem disinclined to spend more than they have to.

With loan rates still high and average auto insurance prices up a whopping 38% in the past two years, "the public just wants to be a little more frugal about it," said Keith McCluskey, CEO of the dealership where Chumley bought her Trax.

Roberts of CarGurus noted that even many higher-income buyers are choosing smaller, lower-priced vehicles, in some cases because of uncertainties over the economy and the impending presidential election.

The shift has left some automakers overstocked with too many pricier trucks and SUVs. Some, like Stellantis, which makes Chrysler, Jeep and Ram vehicles, have warned that the shift will eat into their profitability this year.

At General Motors' Chevrolet brand, executives had foreseen the shift away from "uber expensive" vehicles and were prepared with the redesigned Trax, which came out in the spring of 2023, noted Mike MacPhee, director of Chevrolet sales operations.

Trax sales in the U.S. so far this year are up 130%, making it the nation's top-selling subcompact SUV.

"We're basically doubling our (Trax) sales volume from last year," MacPhee said.

How long the preference for lower-priced vehicles may last is unclear. Charlie Chesbrough, chief economist for Cox Automotive, notes that the succession of expected interest rates cuts by the Federal Rates should eventually lead to lower auto loan rates, thereby making larger vehicles more affordable.

"The trends will probably start to change if these interest rates start coming down," Chesbrough predicted. "We'll see consumers start moving into these larger vehicles."

____

AP Economics Writer Christopher Rugaber in Washington contributed to this report.

Continue Reading...

Popular

Trump's 'Big, Beautiful Bill' Offers Seniors A $6,000 'Bonus' Tax Deduction: Here's How You Qualify For The Benefit

Trump's Big, Beautiful Bill offers a $6,000 senior bonus deduction from 2025-28. Couples can save $12,000. Retirees with incomes up to $75,000 benefit most.

The Unlikely Duo Rethinking Wearable Technology - Ad

Why did a surgeon and Snap exec team up? They saw the missing ingredient in the $84T wearables market: behavior. So they built Emteq and invented smart glasses sensors to track real-time expressions, unlocking insights into why we do things. With a $15M term sheet already secured, Emteq is what Big Tech's missing.

Marjorie Taylor Greene: 'Muslim Takeover' Threatens American Women

Rep. Marjorie Taylor Greene (R-Ga.) has expressed her fears regarding what she believes to be the most significant threat to the freedom of American women.

The Tesla Shock Nobody Sees Coming - Ad

While headlines scream "Tesla is doomed"...Jeff Brown has uncovered a revolutionary AI breakthrough buried inside Tesla's labs. One that is helping AI escape from our computer screens and manifest itself here in the real world all while creating a 25,000% growth market explosion starting as early as July 23rd.

Kevin O'Leary Says 'You'll Never Be Free' If You Remain An Employee, But There's Actually Nothing Wrong With It: Here's Why

Shark Tank investor Kevin O'Leary says only 1 in 3 people have the determination to succeed as an entrepreneur and taste true freedom. He also praises Steve Jobs and Elon Musk for their high signal-to-noise ratio and work ethic.

Mystery Seller Behind $105 Million Plot Next to Jeff Bezos Estate Finally Revealed

A plot of land neighboring Jeff Bezos' property in Miami was sold for a staggering $105 million. The undeveloped lot was sold by German investor Mikhail Peleg.

How to Hack a $1.3T Market - Ad

Forget concrete. The new foundation for real estate success is digital, and Pacaso leads the way. Their tech unlocks a $1.3T real estate market. They've already earned $110M+ in gross profits in their operating history and reserved the Nasdaq ticker PCSO.

Trump's Tariffs, Boeing's Blowout, Tesla's Robotaxi, BYD's European Triumph And GM's Massive Recall: This Week In Mobility

This week's business and finance highlights include Japan's rejection of Trump's auto tariffs, Boeing's scrutiny over a mid-air incident, Tesla's Robotaxi launch, BYD's dominance in Europe, and GM's massive vehicle recall.

Quantum Stocks Surge And Stumble: Here's What Happened This Week

Quantum Computing announced a $200 million private placement, Microsoft's CEO said quantum computing could take scientific advancements to the next level and more from the week.

The Missing Ingredient for Big Tech's $3T Recipe? - Ad

Big Tech doesn't build everything; they buy what's next. And only Emteq's tech offers real behavior insights for smart glasses, key to unlocking the $3T XR market. Their patented sensors track live facial muscle movements. With health-focused smart glasses in demand, only Emteq has this tech.

Goldman Just Launched Two New Bond ETFs; Here's Why Investors Should Pay Attention

Goldman Sachs Asset Management debuts two new actively managed fixed income ETFs in response to rising demand for active strategies in a volatile rate landscape.

Greenland has a message for the rest of the world: Come visit

NUUK, Greenland (AP) — has a message for the rest of the world: We’re waiting for you.

Is Elon's Empire Crumbling? - Ad

Jeff Brown - the legend who called Tesla and Nvidia early - says Elon is about to launch a $25T AI revolution. This isn't another chatbot. It's real-world AI that could 14X the impact of ChatGPT. But after July 23rd, it may be too late.

Trump Has 'Already Won' By Dodging Accountability In Fed Showdown, Says Apollo's Jim Zelter

According to Jim Zelter of Apollo Global Management, President Donald Trump has already set the stage for passing the blame.

FDA Submission Expected This Summer - Invest Before It Happens - Ad

This company is making heart disease easier to detect with AI. Their tech has officially been designated a "Breakthrough" by the FDA. You now have an opportunity to get in at a potential inflection point.

Elon Musk Says 'Clear Path' To Restoring Hearing With Neuralink, But The Deaf Community Want To Have Their 'Say'

Elon Musk's Neuralink faces backlash from the deaf community after proposing brain implant technology to restore hearing, with deaf adults calling for inclusion in the research process.

PHOTO ESSAY: In rural Alaska, collecting driftwood saves time, money and brings jobs

GALENA, Alaska (AP) — As ice breaks on the Yukon River, Jake Pogrebinsky looks at the water from shore, searching for a large log floating downstream.

A Historic Gold Announcement Is About to Rock Wall Street - Ad

The greatest investor of all time is about to validate what Garrett Goggin has been saying for months: Gold is entering a once-in-a-generation mania. Front-running Buffett has never been more urgent - and four tiny miners could be your ticket to 100X gains.

Dalai Lama To Deliver Major Address On 90th Birthday As China Tracks Succession Moves

The 14th Dalai Lama will address a major three-day gathering of Buddhist religious figures this week ahead of his 90th birthday.

Fox: China Is Hiding a '401K Nuke Switch' Under Trump's Nose - Ad

China holds $784B in U.S. debt-and may trigger a dollar collapse. Gold is already soaring, with forecasts up to $6,000-$30,000. Protect your savings now. Claim the free 2025 Gold Guide and discover a Trump-era IRS loophole to buy gold tax- and penalty-free.

Steve Jobs Took Secrecy To Fight Club Levels For This Critical Mission At Apple — 'People Thought They Knew…But Nobody Knew'

Apple's original iPhone team, under Steve Jobs, operated with intense secrecy, likening their work to "Fight Club," with no one outside the core group knowing the device's design until its 2007 debut.

Michael Novogratz's Galaxy And Invesco File To Launch Solana ETF: What You Should Know About QSOL

Asset management giant Invesco filed for a cryptocurrency exchange-traded fund focused on Solana (CRYPTO: SOL) on Wednesday, expanding its offerings beyond Bitcoin (CRYPTO: BTC).

Back This Medical AI Tech - Ad

You don't often find healthcare tech company valued at $4M. HeartSciences is an exception. With $75M invested, including R&D, clinical trials, and product development, their patented AI software is approaching FDA submission, a potential major inflection point.

These are the celebs who are attending Jeff Bezos’ Venice wedding

VENICE, Italy (AP) — arrived in Venice on Thursday, leading a star-studded guest list of celebrities descending on the lagoon city for the weekend wedding of Amazon founder Jeff Bezos and Lauren Sánchez.

BigBear.ai (BBAI) Stock Soars 21%: What's Going On?

Shares of BigBear.ai are trading sharply higher Tuesday afternoon. The rally comes without any new company-specific announcements.

Wall Street Says BUY GOLD, But... - Ad

While markets wobble, gold keeps smashing records-and banks say it's just beginning. Goldman urges "buy gold" to hedge trade wars; JPMorgan plans $6,000 an ounce and just took delivery of $4 billion in bullion. Yet past bull runs saw 13x-1,000x bigger gains without buying more gold.

Scott Bessent On Replacing Powell As Fed Chair: 'I Will Do What The President Wants' — Plays Down Shadow Chair Speculations

U.S. Treasury Secretary Scott Bessent declined to rule out the possibility of replacing Jerome Powell as Federal Reserve Chair and has instead deferred to President Donald Trump's decision on the matter.

Trump ramps up attacks on the Federal Reserve but Powell sticks to 'wait and see' stance

WASHINGTON (AP) — Federal Reserve Chair Jerome Powell on Tuesday stuck to that the central bank will keep its key rate on hold while it waits to see how President Donald Trump's effect the economy, despite the from the White House, which wants lower borrowing costs.

The Unlikely Duo Rethinking Wearable Technology - Ad

Why did a surgeon and Snap exec team up? They saw the missing ingredient in the $84T wearables market: behavior. So they built Emteq and invented smart glasses sensors to track real-time expressions, unlocking insights into why we do things. With a $15M term sheet already secured, Emteq is what Big Tech's missing.

Home Depot's $5.5B Deal Expands Its Reach To Thousands Of Job Sites

Analyst maintains Buy rating on Home Depot with $450 price target, noting plans for subsidiary SRS Distribution to acquire GMS for $4.3B.

The Tesla Shock Nobody Sees Coming - Ad

While headlines scream "Tesla is doomed"...Jeff Brown has uncovered a revolutionary AI breakthrough buried inside Tesla's labs. One that is helping AI escape from our computer screens and manifest itself here in the real world all while creating a 25,000% growth market explosion starting as early as July 23rd.

Diddy Jury Deadlocked On Racketeering Conspiracy Charge As Verdicts Reached On Sex Trafficking Counts — Jurors To Return Wednesday

Jurors in Sean "Diddy" Combs' trial reached verdicts on four charges related to sex trafficking but remain deadlocked on the racketeering conspiracy charge, with deliberations set to continue.

Hong Kong's security net extends beyond arrests as small businesses pressured

HONG KONG (AP) — It’s been years since all but silenced pro-democracy activism in Hong Kong. But a crackdown on dissent in the semiautonomous Chinese city is still expanding, hitting restaurants, bookstores and other small businesses.

How to Hack a $1.3T Market - Ad

Forget concrete. The new foundation for real estate success is digital, and Pacaso leads the way. Their tech unlocks a $1.3T real estate market. They've already earned $110M+ in gross profits in their operating history and reserved the Nasdaq ticker PCSO.

California-Trump Legal Battle Over National Guard Deployment Escalates After Court Ruling

California's legal battle with Trump over military deployment in LA is at a standstill after an appeals court ruled in Trump's favor.

Trending Now

Information, charts or examples are for illustration and educational purposes only and not for individualized investment management This message contains commercial elements, such as advertising. We only send these offers to those who have opted in to our newsletter. Past performance is not indicative of future results. For these reasons we strongly suggest trading in a DEMO/Simulated account. The information provided by us is for educational and informational purposes only. We make no representations or warranties concerning the products, practices or procedures of any company or entity mentioned or recommended and have not determined if the statements and opinions of the advertiser are accurate, correct or truthful. If you use, act upon or make decisions in reliance on information contained or any external source linked within it, you do so at your own peril and agree to hold us, our officers, directors, shareholders, affiliates and agents without fault.

Copyright traderelite.club
Privacy Policy | Terms of Service