Auto sales, disrupted by the coronavirus pandemic, are at an odd junction this year with far fewer sales than normal, but higher prices, The Wall Street Journal (WSJ) reports.
A new vehicle, on average for August, costs around $35,420, according to research by the firm J.D. Power. The number is a new high prices which have been increasing since before the start of the pandemic in the U.S.
Labor Day Weekend is usually a time when auto sales see huge discounts as dealers look to unload all their extra stock before the next year’s models come out. The pandemic has disrupted all of that. The trajectory is similar to that of the housing market, in which the low interest rates and fewer homes available have driven up the prices, WSJ writes.
The divide is one that WSJ characterizes as one between “the haves and the have-nots.” The difference is in the way the shutdowns earlier this year spurred demands for trucks that could withstand rougher terrains as Americans turned more to vehicles ready for road trips to get out of the house.
Car sales are down 19.8 percent, according to stats from Motor Intelligence. The numbers are likely to remain low or stagnant for the rest of 2020, with younger buyers edged out of the market through the trend of automakers focusing on manufacturing bigger, more expensive vehicles as opposed to the cheaper smaller cars and Sedans that led them in the past.
Those with the funds to buy are coming for the pricey SUVs and trucks. The trend is one that has benefited Detroit automakers that have specialized in those vehicles for years. Companies like Hyundai and BMW, which have expanded into those categories recently, are also set to benefit.
There has also been a shift to online car sales, with eCommerce car retailer Carvana reporting a $1.12 billion revenue influx in the second quarter. CEO and founder Ernie Garcia said people who hadn’t previously considered buying a car online were now giving it a second thought.
NEW PYMNTS DATA: HOW WE SHOP STUDY – SEPTEMBER 2020
The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.