At one time in America, you could essentially tell much about a neighborhood by looking at the autos parked among the homes. For a number of decades, GM, Ford and Chrysler offered cars or brands at different price points. There were over 10 different categories, and it later became 5 when GM consolidated brands. Every decade since has seen further consolidation and the rise of SUVs and trucks for the urban driver. Maybe those days are coming back.

In an article by Neal E. Boudette of New York Times News Service, in 2025 car sales rose to 16.3 million, how is buying?

The auto industry has evaded a slump because affluent Americans with well-paying jobs and robust savings have continued to buy new cars at a decent clip.

Families with a household income of $150,000 a year or more now buy 43% of the new cars sold in the country. The number is up from 1/3 in 2019. Families with less than $75,000 a year are buying 25% of vehicles down from a 1/3 in 2019.

Toyota sold 2.5 million cars and light trucks. up 8% from 2024. Also at 8% were sales in the 4th quarter versus sales from 4th quarter in 2024.

GM sold 2.9 million cars which is up 6% from 2024, however sales were down 7% in the 4th quarter when compared to a year ago.

The industry considers sales of 16 million a good year, Cox Automotive, a research firm, is estimating sales will be 15.8 million.

In every industry there are headwinds, tariffs have increased prices but not as much as analysts expected. Unemployment has crept up and consumer confidence has fallen in recent months.

The average auto loan costs 9.3% up from 8.7% in 2024. Cox Automotive calculated that it takes more than 36 weeks of average income to buy a new vehicle up from 34 weeks in 2019.

The average SUV costs $77,000 and sales grew 15%. Sales of medium cars of $33,000 fell 15%.

According to S&P Global, the average age of vehicles on US roads in 12.8, a record high.

It is believed that wealthier Americans are buying new cars partly because the stock market is up or their assets have appreciated. Economists call this the wealth effect.

Linking to dividend paying stocks, in the days passed, there was a vehicle for every budget and owning a vehicle said something about your income and lifestyle. Those days are gone, but driving a new vehicle may say something about your income and lifestyle. Some of the best marketers in the world work for car companies to convince you to buy new. Depending on where you live, owning a car means going to work, which means you listen to the marketing people and buy new, there is a practical reason for having a car culture. In the vehicle world there is the high end and low income but where are the high margins and profits. Does the company capture them?

There are more questions than answers, till the next time – to raising questions.