U.S. car sales remain stuck below pre-pandemic levels amid a struggling auto market, according to The Wall Street Journal.
Higher borrowing costs and increased prices on new vehicles are two key factors steering consumers away from buying, according to the WSJ. Many customers have looked to lease cars to avoid out-of-pocket costs and have turned to purchasing smaller and more affordable vehicle models.
“I don’t think that people really want these teeny, tiny vehicles, but it’s what they can afford right now,” Charlie Chesbrough, Cox senior economist, told the WSJ.
The average new car sold for $44,467 last month, which was down nearly 3% from last year, the WSJ reported, citing data from J.D. Power. That figure was, however, around $34,600 at the end of 2019.
“This market is still pretty unaffordable,” Jessica Caldwell, head of insights at Edmunds, a car-shopping website, told the WSJ.
The auto industry is not the only industry facing struggles with inflated costs, as homeownership costs have also spiked since the pandemic. Additionally, many Americans are having a hard time affording to make their car payments and credit card payments as inflation elevated under the Biden administration.
The inflation rate increased 2.5% annually in August, which was down from 2.9% in July. Inflation peaked at 9% in June 2022.
The Biden-Harris administration has been leading a massive push to transition to electric vehicles (EVs), including by putting strict tailpipe emissions regulations into place and spending billions on subsidies for the production of EVs.
The U.S. auto industry has been facing steep competition from China, and experts have flagged concerns that they are poised to take over the market. China’s hold on the EV market has been a problem for American automakers, with the country introducing export restrictions on graphite, a key material needed to manufacture EV batteries, in October 2023.
The Biden-Harris administration announced on Sept. 20 that it will grant several billion dollars to go toward manufacturing EV batteries to compete with China.
Many automakers have reversed course on EV goals due to a lack of consumer demand. General Motors reported a $1.7 billion loss in January, citing problems with manufacturing that impeded the rollout of EVs in 2023.
Ford has also been struggling to boost sales on its line of EVs, and announced Monday that it would offer free chargers and home installations for EV buyers. The company announced in August that it was canceling plans to build a line of three-row electric SUVs.
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