Automakers are due to report U.S. sales of new cars Tuesday, and analysts expect the industry to report another solid month.
The International Business Times reports most of the world’s Big 8 automakers are likely to report an increase in demand for their cars, trucks and SUVs in April, auto industry analysts say. Nissan and Honda, however, are expected to have ruled the roost last month with double-digit growth in U.S. sales compared to the same month last year, their gains driven by strong demand for popular sedans.
Despite an expected decline for General Motors, the Detroit automaker is likely to regain its usual top spot after Ford Motor eked out a March gain over the maker of Chevrolets and Cadillacs by a slight 900 units. The gain was temporary, however, attributed to a big rise in Ford bulk deliveries to corporate customers, known as fleet sales.
April could see a return to the strong sales pace of the 10 months prior to March, when sales hit a 13-month low. But signs are increasing that the industry is reaching a plateau.
Americans continue to overextend themselves by taking on long financing terms, as much as 84 months and well beyond the three-to-four-year terms most financial advisers recommend. According to J.D. Power and Associates, more than a third of existing car loans are financed at 72 months, or six years, increasing the chances of buyers winding up owing more than their cars are worth down the road.
J.D. Power also expects the number of people who own financed cars that are worth less than what they owe to hit a 10-year high in 2016. And Fitch Ratings, a credit ratings company, reported earlier this year that subprime auto loans that were delinquent more than 60 days rose above 5% for the first time in nearly 20 years.
But for the time being, cheap credit fostered by the Fed’s monetary policy is helping to fuel a record sales spurt in the U.S. Forecasts maintain a 2016 estimate of 17.4 million unit sales for 2016, up from 17.1 million last year and the highest since 2000, for a record seventh consecutive year of growth.
