Resolution of supply-chain issues may be helping auto manufacturers, but inflation and high interest rates could cut into their bottom line.
- Results for car manufacturers during the third quarter were mixed—General Motors performed well, with sales climbing 24%, and Nissan dropped nearly 23%.
- Stellantis sales dropped 6% and Toyota’s fell 7%.
- Economists anticipated flat third-quarter results, and that prediction predominantly held true. Though manufacturers still have buyers, supply chain issues are constricting their ability to distribute goods.
- High interest rates are also affecting buyers’ motivation and ability to make purchases.
- Ford Motor will release its third quarter sales Tuesday.
Why it’s news
With semiconductor chips in short supply over the last couple of years, there has been a dearth of new cars with some customers on waiting lists for new vehicles.
As supply-chain issues resolve themselves, auto manufacturers find themselves facing a new dilemma when it comes to sales—inflation and high interest rates.
High rates on auto loans cause consumers to balk when considering new vehicles. Additionally, inflation has some customers reconsidering that new vehicle purchase.
The average new car loan had an interest rate of 5.7% in the third quarter, the highest in three years, reports The Wall Street Journal’s Mike Colias.
Even with economic uncertainty, whether or not consumer demand will be affected is yet to be seen.
Car prices are 10% higher than they were last year as the average buyer pays more than $45,000 for a vehicle.