New car and truck sales in the United States showed a notable rebound in September, reflecting robust consumer spending and suggesting a stable economic landscape for the third quarter.
Sales rose at an annual rate of 15.7 million, up from 15.1 million in August, according to data from Ward’s Intelligence.
This increase comes after a challenging summer for the auto industry, which was impacted by a significant cyberattack that hindered sales operations. Despite the attack’s conclusion, many dealers faced ongoing difficulties in boosting sales amid high interest rates. However, industry analysts believe that recent declines in borrowing costs could further enhance sales.
Last month, the Federal Reserve reduced interest rates for the first time in four years to combat slowing inflation, with more cuts anticipated. Lower rates are expected to improve vehicle affordability, potentially drawing more customers into showrooms.
“A combination of solid income growth and rate cuts will boost affordability and drive vehicle sales above 16 million next year,” stated Michael Pearce, deputy chief US economist at Oxford Economics.
Car sales play a vital role in overall retail sales and consumer spending, which are key indicators of economic health. Analysts project that the current sales rate could contribute to a gross domestic product (GDP) growth of approximately 3% for the third quarter, a figure that would signify strong economic performance.
Historically, the auto industry reached record sales of 17.5 million vehicles in 2016, but has not matched that figure in recent years. The elevated prices of new vehicles, now averaging $44,467 in September—nearly $10,000 more than in 2019—have made affordability a pressing issue for many consumers. This trend has driven a shift in buyer preferences toward smaller cars and SUVs, as sales of midsize cars, trucks, and larger SUVs decline.
“This market is still pretty unaffordable,” Jessica Caldwell, head of insights at Edmunds, remarked.
She emphasized that many buyers are delaying their purchases due to the high costs associated with new vehicles. Meanwhile, some sellers are adapting to the market by adjusting their offerings; for instance, used car marketplace Vroom recently wound down its eCommerce operations.
As automakers prepare to report their quarterly earnings, sales projections indicate a flat performance compared to last year. Despite these challenges, some companies, like General Motors (GM), reported positive results, with total sales reaching 659,601 in the third quarter—a 2.2% decrease from the previous year, driven by a decline in fleet sales. GM did, however, see a rise in retail sales and record electric vehicle deliveries.
Experts anticipate that while auto sales may remain sluggish through the end of the year, there could be an uptick in activity following the upcoming elections. Current forecasts from Cox Automotive predict total vehicle sales for 2024 will be around 15.7 million, reflecting slight growth from 2023.
The average annual percentage rate for new vehicle loans was 7.1% in the third quarter, consistent with previous quarters, further complicating the purchasing landscape for potential buyers.
Market Watch, PYMNTS, and the Detroit News contributed to this report.
