The pandemic caused many consumers to focus their spending on goods rather than services, but a big shift back appears to be underway, and that is showing up on auto dealer lots across the state.
New vehicle registrations in the state declined 10% in the first three months of 2022 versus the same period in 2021, while used vehicle registrations dropped 2.3%, according to the Colorado Auto Outlook from the Colorado Automobile Dealers Association. That was below the 14.9% decline in the U.S. which contributed to a decline in real GDP of 1.4% in the first quarter.
“Colorado’s new vehicle market and registrations continue to reflect the country’s sagging economy and the auto industry’s ongoing supply-chain issues,” said CADA president Tim Jackson in the release. “Meanwhile, price increases, higher interest rates, lean supplies, and higher gas prices have put pressure on the overall market.”
Higher prices at the pump are giving a boost to alternative vehicles, Jackson said. The market share of hybrid, plug-in hybrid and electric vehicle registrations has gone from 11.8% of the total in the first quarter of 2021 to 17.4% of registrations in the first quarter of this year. But consumers aren’t shifting away from trucks and SUVs to more efficient sedans in a significant way yet.
Toyota continued to have the largest market share of vehicle registrations in the state at 14.9%, followed by Ford at 11.6%, Subaru at 8.6% and Jeep at 6.2%. The top-selling models are the Ford F-Series at 4.4%; the Ram Pickup at 4.1%; the Toyota RAV4 at 3.9%, and the Toyota 4Runner at 3.2%.
“This switch to services is reversing the sharp shift to goods caused by the pandemic. Car sales slowed sharply in March. If the slower sales pace continues, this category will not be a major factor driving growth going forward,” said Dean Baker, a senior economist at the Center for Economic and Policy Research in a note on Thursday’s GDP report.
The Outlook calls for new vehicle registrations to fall an even sharper 15% plus in the second quarter. If that happens, consumers needing to buy could face a more favorable market than they have seen in the past two years.
iSeeCars, an auto search engine, estimates that used car prices are starting to fall, but they are up 30.6% in Denver over the past year, with many used models still selling for more than new. The auto search engine recommends consumers should wait if they can. But if they need to do a deal, they should keep a flexible attitude and trade in their used vehicles while the market is still hot.
“The best financial decision is to wait to purchase a new or used car and to keep your current car for as long as possible. New car inventory is expected to improve beginning in the second half of 2022, which will also create more used car inventory as buyers trade in their old cars,” predicted Karl Brauer, an executive analyst with iSeeCars, in a tip sheet on navigating the auto market.
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