What are the reasons Auto Sales have dropped this winter?
If you kept up with the news that’s been recently going on, you will better understand the gravity of this situation that how Columbia auto sales along with many other states and cities have dropped this winter? There are actually a lot of factors which is being played for the downfall of the sales, which can be categorized as man-made and natural causes.
Before understanding the situation that has been going around the world, we could gain some insight into the dilemma which has been experienced by many dealerships around the United States. The biggest reason of them all is the increase in tariff rates for many raw materials, such as aluminum and steel, which was increased by Federal Government last year in order to create a deadlock across Chinese markets.
Increased tariff on Raw materials
Since Columbia is also one of the markets in the United States, everything that other dealerships are facing is being faced in Columbia as well, which primary means Global trade war with US and China, along with its implications. The increase in tariffs on aluminum and steel has declined the production of the vehicle and added a lot of roadblocks on various facets during vehicle manufacturing.
To support this low number of cars being manufactured, another main reason is the cost applied on R & D in order to find more Eco-friendly emission system, especially for European and Chinese markets. With extra costs going on these alternative routes, the car manufacturing is facing plummet on manufacture numbers.
Increase interest rates on Vehicles
For a better understanding on how car loan interest rates work, watch the following video:
According to the Consumer Ports, around 84.5% of customers who purchases a new car use financing options, either by lease or loan. Through some governmental level policies, the car dealership has to face a lot of sales drop around the states this winter. One of the main reason is the interest rates, which was increased last year by the Federal Government from 5.2% to 5.76%. This increase has diverted people towards purchasing used cars in greater quantity than new cars from dealerships.
What do experts have to say?
That’s much as been understood by policymakers and media which should us trend of downfall in the car manufacturing industry as well as dealerships. Many experts have joined in to analyze how the market is reacting with all these factors in a more deeper way.
According to a market analysis in Washington, the new car market is facing a general decline after over a decade period is mostly with the increase in used car sales. The main reason behind this phenomenon is many models are being available in the market which is only 3 years old. Many people understand the use of a used car with minor mileages to be a better deal than a new car with increased interest rates.
Natural disaster in South Carolina
In Sept this year, Hurricane Florence, a Category-4 tropical storm has struck down on Gulf coasts and Carolina states, which is a major reason for the decline in sales of new cars. Around 20,000 to 40,000 cars were destroyed during the storm and people incurred a lot of financial complications with their damaged properties.
According to Cox Automotive, the damages and after effects from Hurrican Florence is indeed a fact, but thankfully it’s manageable.
Most affected Vehicle Type
Without a doubt, we have experienced a nose drop at the sales of automobiles in Columbia, South Carolina which really happens quite rarely. The most affected vehicle, if you have guessed right, was passenger vehicle. Not only international brands such as Japanese manufacturer made vehicles were affected but it has also troubled the US car manufactures as well, such as Ford.
Secondly, we saw a steep downturn graph of sales for SUV and small trucks during winter, but it was for a small time and is now increasing at a steady rate.
List of Car dealerships in Columbia, SC that has been affected by lower sales:
Let’s look into the car dealerships located at the Columbia SC which have experienced a drop in car sales during this winter.
1. Dick Dyer Toyota
Being an official Toyota dealership in Columbia SC, Dick Dyer has been greatly hit by a low sales in their new cars section. During this year’s winter, the Toyota sales have dropped to around 0.6% as compared to the last year’s sale. The Model which is most affected is Toyota Corolla, Toyota Camry Avalon, and Land Cruiser.
2. Midlands Honda
Even Honda Dealerships were not favored during this sales drop dilemma which is happening around Columbia, SC in particular and US markets in general. Midlands Honda, a Columbia SC based car dealership has experienced a downturn in sales around 5% which is staggering. The owners at Midlands Honda are worried that if sales drop like this would be followed, the implication will not be favorable. The most affected Models in Honda make was Honda Accord with a long shot.
3. Galeana Kia
Kia was also among those manufacturers that hit badly by growing financial tension around the world. With a decrease in sales for about 2%, Kia makes are increasing their used cars bandwidth to much greater strength. Kia Forte, and Soul did the most hit points in getting the last place, based on its winter sales this year.
4. BMW of Columbia
Even the German manufacturers were not spared in this mayhem which results in the drop sales for most respectable cars around the world, BMW. the BMW of Columbia did experience a 1% drop in sales, although its negligible as compared to other, but still a drop sales. The international markets are facing tremendous challenges to keep up with the high tariffs which made their cost higher.
Things have gotten into limbo if you are following the news. The international tariffs and trade war between China and the US has created tremendous challenges for international car manufacturing markets. The Federal government has acknowledged the problem and are working to minimize the pressure. One result of it was a trade agreement from Mexico to produce every vehicle on US land instead of outsourcing the manufacturing to Mexico, in the quest to increase more jobs and reduce pressure for sales drops to much extent.
For more information on automobiles and car dealerships, take some time and read the following related topics.