• by Tanya Gazdik , May 2, 2018

U.S. auto sales slid 5% in April, according to Edmunds, as interest rates on new vehicle loans remained at elevated levels not seen since before the 2009 recession.

April marks the first month that General Motors did not reveal its sales figures, instead opting to report quarterly. Various industry estimates indicate GM sales were anywhere from flat to down 8% for April. Edmunds estimated that GM April sales were down 3% while Cox Automotive is estimating a slight decrease.

According to the analysts at Edmunds, the annual percentage rate on new financed vehicles averaged 5.6% in April, marking the third straight month rates rose above 5%. This compares to an average APR of 5% in April 2017 and 4.2% in April 2013.

Edmunds experts say that consumer wallets are being squeezed in other areas as well. The monthly payment on new vehicles averaged $535 in April compared to $509 in 2017 and $463 in 2013. The average amount financed increased to $31,318 in April compared to $30,315 last year and $26,679 in April of 2013. Down payments also increased, reaching $3,911 in April, compared to $3,770 in 2017 and $3,494 in 2013.

“With more potential Fed rate hikes ahead, we don’t expect to see these higher vehicle ownership costs retracting unless automakers are willing to dig much deeper into their pockets,” said Jessica Caldwell, executive director of industry analysis for Edmunds. “Considering the fact that rates were in this territory 10 years ago, this isn’t an extraordinary phenomenon, but it is going to take a readjustment in the minds of consumers. Car shoppers should brace themselves because this is likely a new normal.”

While most automakers were down or up slightly, Nissan reported a huge sales decline of 28%. The results indicate that Nissan is slashing its sales to fleet customers, including rental companies, which are less profitable than sales to individuals, analysts said.

Fiat Chrysler Automobiles reported a 5% increase compared with sales in April 2017. Overall sales were pushed by the Jeep brand, which reported record sales for April. Subaru of America, Inc. reported its best April in the history of the company. Crosstrek sales for April 2018 increased 69.9% over the same month in 2017 and achieved the best April ever. Ford’s sales results — down 4.7% — demonstrate the importance of fresh products, says Michelle Krebs, executive analyst for Autotrader.

“Sales of the Lincoln Navigator more than doubled,” Krebs notes. “Sales of the aged Escape dropped double digits. A new Escape and Explorer, coming soon, can’t arrive soon enough.”

The movement to crossovers and sport utilities is not letting up, says Tom Libby, manager, automotive loyalty and industry analysis, IHS Markit. They now comprise 46% of all new vehicle registrations, up three points from 2017 and a full 20 points from 10 years ago, based on IHS Markit new vehicle registrations (through February). 

“Moreover, seven of 10 households that do buy an SUV or CUV will get another one, a much higher loyalty rate than any other body type in the industry,” Libby says. “Lastly, high-end SUV/CUV trim levels are selling at a brisk pace, which should contribute to higher revenues for those model lines.”