Beige Book: Affordability woes hinder auto sales

Affordability concerns dampened auto sales in July and August as elevated interest rates and high vehicle prices point to a heightened need for incentives to boost sales at some dealerships. The need for incentives comes as dealers in several Federal Reserve districts reported lower sales and rising inventory levels in July and August, according to the Fed’s Beige Book, published Sept. 4. The Beige Book, published eight times a year, provides a regionalized view of economic conditions in the United States. . The latest report cited data collected after July 8 and before Aug. 26. Dampened sales Dealers in the Cleveland Fed region, covering Ohio, most of eastern Kentucky, western Pennsylvania and part of northern West Virginia, indicated that sales were hampered in July and August and varied based “on the availability and generosity of manufacturers’ incentives on new-vehicle purchases,” according to the report. Similarly, dealers in the Philadelphia Fed region saw auto sales dip in July and August as affordability concerns drove down consumer demand, according to the report, which indicated that the dip in sales urged more dealers to add incentives to keep inventory levels from rising. . The Philadelphia region spans Delaware, southern New Jersey and eastern Pennsylvania. In the Atlanta Fed region, including Alabama, Florida, Georgia, southern Louisiana, southern Mississippi and most of eastern Tennessee, dealers reported a “modest decline” in demand as consumers “delayed big-ticket purchases,” according to the report. Sales had “fallen short of expectations” in July and August for dealers in the St. . Louis Fed region, which includes Arkansas, portions of Illinois, Indiana, Kentucky, Mississippi, eastern Missouri and West Tennessee. . One dealer in the St. . Louis Fed region indicated that consumers are delaying purchases. . Therefore, rising inventory levels continue to reduce buying pressure, according to the report. Rebounding sales Meanwhile, other dealerships saw sales recover in July and August after the cyberattack on software provider CDK Global in June hindered sales for many dealers. . Increasing consumer demand also drove an increase in sales at some dealerships, according to the latest report. Dealers in the New York Fed region, for example, saw “particularly brisk sales” in July after business operations were hampered in June due to the cyberattacks, according to the report. . The New York Fed covers New York, Fairfield County in Connecticut and northern New Jersey. Consumer demand in July and August was steady for dealers in the Chicago Fed area, which spans northern Illinois, northern Indiana, Iowa, Michigan and southern Wisconsin, with some reporting an increase in heavy truck sales, according to the report. Dealers in the western part of the Minneapolis Fed region, covering Minnesota, Montana, North Dakota, South Dakota, northwestern Wisconsin and the upper peninsula of Michigan, saw sales increase “modestly from July through mid-August" on a year-over-year basis, according to the report. Sales on recreation and powersport vehicles , however, were “sluggish” during the period. Inventory, incentives up New-vehicle inventory rose across most of the Fed regions as more dealers leaned on incentives to boost sales. The Philadelphia Fed region, for one, reported that more dealers “introduced or increased” incentives in July and August given the decline in sales, according to the report. Inventory was also elevated at dealerships in the Fed’s New York region, though dealers said it has allowed for a greater product mix for consumers, the report stated. Auto Finance Summit, the premier industry event for auto lending and leasing, returns Oct. 7-9 at Wynn Las Vegas. . To learn more about the 2024 event and register, visit www. .AutoFinanceSummit.com.

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