US: auto sales boom brings pricing too far up? image

The US auto market is booming just half a decade after collapsing and nearly killing off two of its major automakers – GM and Chrysler. Consumers keep lifting sales data against numerous skeptical predictions and forecasts roll the good times ahead.

Lifting the deliveries of new cars, trucks and crossovers, the consumer interest is so high now that a new Bank of America research has predicted that US auto sales could reach a record high figure of 20 million units in 2018. Last month, customers ordered new vehicles worth $52 billion, with automakers snatching more revenue than ever as the average price of a vehicle soared to $32,452, up 4% from the same period last year. This could be treated as a surprise because other economic indicators – such as the stagnating American middle class income – are not so positive. The consumer workaround this conundrum includes getting all-time high lengthy loans, while others have flocked to the growing market of certified used car programs.

So, naturally, some of the auto industry critics are now wondering if the sales pace is sustainable, as most of the automakers are lifting prices well above the rate of inflation, hitting the already troubled middle-class customers. Traditional affordable brands such as Hyundai and Kia are now moving upscale, so the industry experts believe a new entry-level segment could be created once the Chinese automakers finally decided to enter the US market. Additionally, the sales are supported by the pent-up demand, as sales back in the Great Recession dropped below ten million, plunging around 40 percent from the usual norm and the average age of vehicles on US roads hit a record eleven years.