Posted on 10/23/2024 2:36:20 PM PDT by george76
A survey conducted by Santander Holdings USA, attempting to probe the status of middle-class households over the last twelve months, has reported that over half are actively delaying new-vehicle purchases. While the study is broad in scope, encompassing some similarly bleak news about home buying, the two issues seem closely related as rising costs don’t appear to be doing the economy any favors.
With 77 percent of the middle-class respondents saying they need a vehicle in order to get to work, one would assume that the demographic is one the automotive sector can rely on for business. However, 52 percent of the households Santander questioned stated that they have delayed purchasing a new vehicle within the past year due to cost. But the cost isn’t limited to rising car prices and swollen interest rates.
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While we’re focused entirely on automotive issues, home ownership has indeed played a factor in reducing vehicle purchases. Due to the fact that fewer Americans can afford to buy property these days, many households are ultimately putting more of their monthly budget toward lodging.
Buying a house costs more upfront and incurs property taxes. But owners tend to find themselves in a much better financial position over time, especially once the property is paid off. Renters never own the places they live and are subject to shifting rates. This is particularly interesting because renters tend to earn less than their home-buying equivalents. Ironically, having less money now often means spending more money later.
Regardless of the why, more people renting means more income going toward landlords and apartment management companies. But less of that cash is making its way to dealerships and automakers. Santander framed the result of its study as younger generations believing that “homeownership as a sign of financial prosperity is an outdated concept.” The idea here is that renting offers greater flexibility to pursue other opportunities and no requirements in terms of maintaining the residence. However, a majority of respondents also said they wanted more affordable housing options and more homes built to reduce prices — suggesting that the real issue is likely affordability and not a sudden love affair with apartment buildings.
At the end of the day, most people are going to choose to prioritize having a place to live and something to eat over buying something new to drive. But there are certainly situations, especially for middle-class individuals, where one item often necessitates the other. Cars can simply be made to last a little longer, a trend that’s reflected by the ever-increasing age of the vehicles we’re seeing on the road.
They cannot last indefinitely, however, and the survey shows that about 40 percent of the middle-class households it questioned still wanted to purchase a new vehicle within the next year. Santander suggested that the matter likely hinged on lower prices and interest rates. Inflation was similarly a major worry, with 81 percent of respondents saying it was of significant concern and 55 percent saying it was the biggest financial obstacle they were presently confronting. The overwhelming majority of respondents likewise saw prices as increasing over the last quarter and assumed they’d continue to scale back spending as a result.
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Nearly 90 percent of households said they were forced to reduce spending within the last quarter, with many likewise confirming that they had dipped into their savings to remain afloat. But those that had exhausted their savings were forced to take on new debt, further limiting their spending choices. We probably didn’t need a bank to tell us any of the above, especially if you happen to be living on any kind of budget. But it does offer additional data points and helps underscore some of the reasons why dealers aren’t terribly optimistic about vehicle sales moving forward.
That said, some of the data actually seems to show that some families have pivoted toward survival mode. Despite a large number of households (52 percent) stating that they had put off buying a new vehicle over the last twelve months, fewer than that said they’d be more willing to entertain making that purchase if financing rates or vehicle pricing declined. That would seem to indicate that their financial decision is based on additional factors. Only about 40 percent of the respondents were even considering buying another vehicle within the next 12 months, suggesting that about 12 percent of the individuals that wanted to buy a new car this year may not even bother trying next year.
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Interested parties wanting to get a closer look at the survey’s methodology or results (it's an easy read) can find them here. While the paper attempts to put a positive spin on lapsing home ownership and the declining purchasing power of younger generations, the gist remains that the financial situation for Americans is shaping up to be fairly bleak. Considering how automakers have positioned their lineups and financial institutions have pegged interest rates, we’re not exactly sure when this will turn around. But it doesn’t appear as if it will be anytime soon.
Waiting on that myself for a newer truck, Harris steals it I will make do.
This is hilarious.
I just went out and changed the light bulbs myself on the 18 year old clunker I’m terrified to drive more than 20 miles in.
It’s all I have since a drunk rich non-native totaled my dependable 23 year old car.
Build back better.
Maybe I will get a 2024 truck - in 2030.....
While the paper attempts to put a positive spin on lapsing home ownership and the declining purchasing power of younger generations, the gist remains that the financial situation for Americans is shaping up to be fairly bleak.
We are doing fine with our older cars and we sure don’t want an EV. A hybrid is fine, though.
I don’t want the quirky stuff and I sure don’t want a government kill switch on it.
You know they will eventually kill everyone’s car when the police, fire, ambulance, or dignitary is coming.
With the new auto prices at the levels seen today - and crap that passes for new “quality”...
I’d rather buy an older car/truck and put in a new/rebuilt engine/transmission and swap out the shocks, bearings etc and have a quality car, with no computer chips and nearly as good as new...
The average age of americans’ cars on the road is 12.6 years, which is a record high according to S&P Global.
I’m in my seventh decade. Newest vehicle I ever purchased was four years old.
Newest vehicle my parents ever purchased was about that same vintage.
Dad always said that when you buy a new vehicle you may as well burn ten thousand dollars the moment you drive it off the car lot.
When the future is cloudy it is wise to hold off any major purchase. However, the elephant in the room is credit card debt. Add lack of savings and Americans are facing a perfect financial storm that many will not survive. They are not just living paycheck to paycheck they are living off the paychecks they have yet to earn. In other words they have more financial obligations then they can meet in the near future. If they lose their jobs they are screwed.
Buying new is a rip off. It’s best to avoid it and go for a way better deal.
i told myself that in 2019. Wish I had pulled the trigger on a new vehicle back then.
I’m one of those. And income isn’t always a factor. Talked to a millionaire today who said he’s been waiting because it’s just stupid to buy a car now unless you absolutely have too. Says he’s always encouraging people to drive their cars longer and pay them off and live a few years without a car payment.
No need for a new car when you can buy a used Smart car.
No longer made after 2019 model year. “It is recommended that Smart car engines be serviced every 10,000 miles as they require specialized attention. All types of maintenance are included in this package.” Specialty part places can supply parts as there are no dealers now.
Used average $3,795 to $15,995, depending on the year and condition.
Old AMC Pacer is on several worst car lists.
AMC Pacer (1975–80)
“Including it in Time magazine’s “50 Worst Cars of All Time”, Dan Neil described the Pacer as a “glassine bolus of dorkiness” and that “in the summer, it was like being an ant under a mean kid’s magnifying glass.”
Last year I came across a 2018 Toyota Sequoia. I got it for $45K. New ones at the time were $95K. It had some miles on it, but it is a Toyota and their trucks last forever. I refuse to buy new now.
Who in their right mind would purchase a new vehicle?
2006 4Runner and 2013 Lexus GS 350 F Sport are running fine.
Did they falsely claim? Did they claim, without evidence? Claim is a word that you use to create doubt. They use it every time Trump says something that is true. I am sure there is no real way to determine if someone decided not to buy a car but you can compare sales figures over previous years to determine if the “claims” are factual.
Sounds like many of the people surveyed are suffering from a chronic case of lying eyes.
I had my pick up (7 yrs old) in the dealership a few months ago for an oil change so I browsed new trucks on the lot. Sticker shock, they had no shame.
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