• Aug 14, 2008
Think of it as the Carsumer Price Index; new car sales are under pressure from other factors besides fuel prices and economic slowdowns, much like the Consumer Price Index strips out the price of fuel and food and then makes a proclamation about the economy. At least that's the theory that Pinny Cohen posits. Who's Pinny Cohen? As far as we know, he's an average joe with an internet rostrum and a budding web entrepreneurship who makes some salient points. He's also an Autoblog reader and he's got something to say, so we thought we'd share.

If it's not $4/gallon gasoline or economic stagnation that's putting the brakes on car sales, what else could it be? Cohen posits that the better construction of cars these days, a glut of leases that have led to a tsunami of used cars, and online shopping and telecommuting keeping people home are all contributing factors, says Pinny. Something's got to give for consumers, and new car sales seem to be the weakest link. Every automaker will eventually accept these facts, but the question is whether some will have to close up shop in order to realize that it's a brand new day of decreased production. Check the link to read Cohen's thoughts and let us know if you agree or think of more reasons why besides the crappy economy and high gas prices that new vehicle sales are down.

[Source: PinnyCohen.com, Photo: DealerConnection.com]


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  • 24 Comments
      • 6 Years Ago
      What about the fact that there is just nothing on the market that gets anybody excited right now. Nobody is making an attractive vehicle, Not even the Japanese. The accord, camry, and maxima are all overgrown and ugly, the corolla, civic, and sentra are all boring, people hate SUV's, Detroit 3 have nothing except the Malibu, hatchbacks are not right for middle income families, and I can honestly say if somebody were to just give me 30,000 dollars, I would have no idea what to spend my money on. Maybe a new TSX? I don't know. 2008 = suck for cars.
      • 6 Years Ago
      I think it's also the creeping average base price of all cars (because of numerous factors like price of raw materials) and the fact that car companies feel an obligation to always increase proffits ie make more cars with a higher proffit margin. Those aren't $15000 cars but like everyone knows is $30000 to $50000+ vehicles. So the mix of a bad economy, high gas prices, a financial infrastructure in difficulty and reluctant to give out loans, fewer lease options, AND a somewhat reduced choice in "affordable" new cars leads to a slowdown in car buying. I've never understood how a car with more then 100 thousand miles and 3-4 years could only be 5-10 hundred less then a new model. The industry has been shooting themselves in the foot for a while now imho.
      • 6 Years Ago
      Sounds like a reasonable argument. Although I wouldn't discount $4 gas and the weak economy. As much as Americans love cars, I think people are getting smarter with their money, and new cars are the absolute worst thing to buy with your money due to depreciation.
        • 6 Years Ago
        THE NUMBER ONE REASON is because the election is coming up. I trade in oil.... take a look at any oil stock for the past 4 years from an American oil company/. When elections come around, those prices DROP.

        July's lows always equal June's highs.
      • 6 Years Ago
      I buy used cars, and rent my house. Best way, tons of flexibility, nothing to worry about. But I bet you GM is still going to be chasing volume with silly looking cars such as the Craxx
      • 6 Years Ago
      I believe that the lack of car sales is directly related to consumer confidence. There are alot of expenses that are not within our control. For example gas prices, Utilities etc.. Purchasing a new vehicle is a discretionary purchase. It is one area where we can be in control. We can chose to wait on purchasing another vehicle until we are more confident in our financial future. Unfortunately, I dont see the economy improving dramatically in the near future. As a collective group, we as consumers have been irresponsible in the past and now the bill has come due.
      • 6 Years Ago
      $4/gallon is nothing really, look at what is paid in the UK.
        • 6 Years Ago
        That is not relevant, in the UK my understanding is that it is all taxes. I think we made it clear we will not pay that.
        • 6 Years Ago
        Look a the value of the pound, look at british household wages, and look at british labor party policies that charge much more tax on a comparable unit of liquid volume, for fuel.

        Look at the population density, commuting patterns, and square mileage differences between the small british isles, and the large american expanse.

        Just because it happens in place B, doesn't mean it should in place A.

        People in other comments seem to have put a good finger on it... consumer confidence in the economy, outlook, and view of economic trends.

        The price of cars are historically down, but other things have taken up that loosed purchasing power. Computers, and other technology being one.

        Also, wages have been flatter than inflation over time since the late 1960s. A single income household is almost unheard of, and even by my own budget calculations, on my near-national-average income, can't make much headway, if not in the red.

        When food and fuel are stupidly left OUT of government inflation figures, how can we trust them when they claim less than one percent quarterly growth. If food and fuel, something EVERY american pays for, directly or indirectly, were factored back in, this would in fact be classified as a recession. A recession that needs to happen to correct the market from almost a decade of shifting bubbles in the economy.

        July's inflation was TWICE as high as "experts" (who are always wrong, yet still experts) predicted, and the highest inflation in 17 years. Just reported today.

        Oil price may be a bit down, but geo-political unrest is not going to be doing the energy market any favors. We need to solidify our energy supply, and our economic standing, and now, before the hybrid totalitarian/newly wealthy false-capitalistic asian powers back us into a corner that we have no way out of. Russia and China are shaping up to be forceful, and adversarial.

        With income buying less, new high-ticket purchases get put down, for necessities, and keeping existing systems working. Looking out the window at geo-politics, and looking at our own mess to clean up, now isn't the time to be leveraging debts with assumptions of always being able to pay back that debt. The housing crisis is serving as a lesson that debt isn't free, even if you think you can pay it one day, you can find ourself in deep later.

        Harsh lessons don't make people smarter than the past, but they do repeat the lessons of history, and remind people, over and over again.
      • 6 Years Ago
      I think there are still cars that are in very very high demand..... say, the Nissan GT-R, BMW M3, and the Toyota Prius.

      So, I guess if the manufacturers are hitting the right buttons, carsumers would still purchase new vehicles.

      • 6 Years Ago
      As others have said there are many factors at work. Like a perfect storm if you will. The economy, consumers fears for their jobs, great used car prices (check out the prices on 2-3 year off lease cars). The other major point is the negative equity most people who are trading in cars find themselves in. When you have 72 month loans with no money down, you will be so under water that the dealer can't make a deal. The last thing I would add is the number of people with poor credit who where able to get loans now can't.
      • 6 Years Ago
      Funny Picture, btw!

      Alero forever!
      • 6 Years Ago
      Obviously the weak economy is a huge factor, but the glut of used cars isn't helping either. Why spend $22K for a new Mazda 6 when I can get a used one with less than 20,000 miles on it for about $16K. Is the new one really worth $6,000? Hardly. And $6,000 will buy at least 1500 gallons of gas.
      • 6 Years Ago
      Yeah, just because there is one good reason doesn't mean there aren't others (although they do tend to be intertwined). So here's one more: The Mexican economy is doing a little better, so they aren't as willing to take our old junk off our hands.
      • 6 Years Ago
      Logically? Yes. But as soon as anyone starts earning real money, the very first instinct is to buy a new car. And logic has little to do with that decision ;)
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