High Car Prices Mean Lower New Vehicle Sales for December

The average auto loan monthly payment has gone up nearly $50, to nearly $718 a month.

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A car dealership stands in Manhattan on October 28, 2021 in New York City.
Photo: Spencer Platt (Getty Images)

New vehicle sales in the U.S. are expected to decline in December due to high car prices and the rising interest rates for auto loans. This comes in a new report from J.D. Power-LMC Automotive.

“Elevated pricing, coupled with repeated interest rate increases, continue to inflate monthly loan payments,” Thomas King, president of data and analytics and J.D. Power, told Reuters. The outlet also says that average monthly car payments for new vehicles are up $47 from a year ago – to $718 per month. From there, retail sales for new vehicles this month are expected to be right around 1.04 million units. That’s down 2.8 percent from the same time last year. But J.D. Power doesn’t expect the downward trend to continue into 2023, due to an increase in inventory levels.

“Even with the probability of an economic downturn, pent-up consumer demand from the past two years will keep inventory levels relatively low,” King said in J.D. Power’s report.

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Retail sales may be down, but they are being made up by non-retail sales, according to the outlet.When you combine retail and non-retail, sales are likely to reach over 1.25 million units. That’s a 5.3 percent increase over the same period last year.

Reuters says global new vehicle shares are supposed to end up around 80.7 million units this year. That is a lot of vehicles, but it’s still a one percent decrease from the year before. J.D. Power says it projects vehicle sales to grow six percent to 85.7 million units even though there could be an economic recession on the horizon.