California, Michigan Auto Sales to Decline as Debt-Strapped Customers Curb Purchases, Economist Says
LAS VEGAS — Economic weaknesses in Michigan and California may dampen auto sales and financing volume, said Robert Dye, senior vice president, and chief economist at Comerica Bank.
“On a regional basis, we’re seeing weakness in the Midwest, and we’re also seeing weakness in the West, so there’s an affordability issue,” Dye said in a session at the 2018 Auto Finance Summit. “Material prices, labor costs, and financing charges are going up.”
As such, auto sales that would typically happen late in the cycle are being thwarted by consumer debt.
“Downmarket, we’re seeing some vulnerabilities,” he said. “We have a whole lot of potential car buyers right now who are strapped with debt and have a very different view because of school loan debt.”
In California, a cooling real estate market is pushing down auto sales and the overall economic outlook, he said. “I started by saying that U.S. metrics are looking really good right now, but California steps back from that,” he said, noting that Comerica’s Economic Activity Index for the state had declined four straight months through July.
