Lower-priced new cars are gaining popularity in the U.S. — and not just for cash-poor buyers

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Lower-priced new cars are gaining popularity in the U.S. — and not just for cash-poor buyers

An “affordability shift” is taking root in the U.S. auto industry, according to auto analysts. 

The trend is being led by people who feel they can no longer afford a new vehicle that would cost them roughly today’s average selling price of more than $47,000 US — a jump of more than 20 per cent from the pre-pandemic average. 

Yet there are other buyers who could manage the financial burden but have decided it just isn’t worth the cost. And the trend is forcing automakers to reassess their sales and production strategies. 

Had she wanted to, Michelle Chumley could have afforded a pricey new SUV loaded with options. But when it came time to replace her Chevrolet Blazer SUV, for which she’d paid about $40,000 US three years ago, Chumley chose something smaller. And less costly.

Michelle Chumley poses for a portrait beside her new Chevrolet Trax compact SUV, Thursday Sept. 26, 2024, in West Chester, OH.
Ohio’s Michelle Chumley poses for a portrait beside her new Chevrolet Trax compact SUV. (Jeff Dean/The Associated Press)

With her purchase of a Chevrolet Trax compact SUV, Chumley joined a rising number of buyers who have made vehicles in the below-average $20,000-to-$30,000 US range the fastest-growing segment of the new-auto market in the U.S.

“I just don’t need that big vehicle and to be paying all of that gas money,” said Chumley, a 56-year-old nurse in Ohio.

There are other buyers who, like Chumley, could manage the financial burden but have decided it just isn’t worth the cost. And the trend is forcing America’s automakers to reassess their sales and production strategies. 

With buyers confronting inflated prices and still-high loan rates, sales of new U.S. autos rose only 1 per cent through September over the same period last year.

If the trend toward lower-priced vehicles proves a lasting one, more generous discounts could lead to lower average auto prices and slowing industry profits.

“Consumers are becoming more prudent as they face economic uncertainty, still-high interest rates and vehicle prices that remain elevated,” said Kevin Roberts, director of market intelligence at CarGurus, an automotive shopping site. 

“This year, all of the growth is happening in what we would consider the more affordable price buckets.”

Under pressure to unload their more expensive models, automakers have been lowering the sales prices on many such vehicles, largely by offering steeper discounts. In the past year, the average incentive per auto has nearly doubled, to $1,812 US, according to Edmunds, an online automotive resource for consumers.  

The move in buyer sentiment toward affordability came fast this year, catching many automakers off guard, with too-few vehicles available in lower price ranges. One reason for the shift, analysts say, is that many buyers who are willing to plunk down nearly $50,000 US for a new vehicle had already done so in the past few years.

People who are less able — or less willing — to spend that much had in many cases held on to their existing vehicles for years. The time had come for them to replace them. And most of them seem disinclined to spend more than they have to.

With loan rates still high and average auto insurance prices up a whopping 38 per cent  in the past two years, in the U.S., “the public just wants to be a little more frugal about it,” said Keith McCluskey, CEO of the dealership where Chumley bought her Trax.

Published at Tue, 22 Oct 2024 11:21:38 +0000

Former Abercrombie & Fitch CEO Mike Jeffries faces federal sex trafficking charges

Former Abercrombie & Fitch CEO Michael Jeffries and two other men have been arrested on sex trafficking and interstate prostitution charges, a spokesperson for U.S. federal prosecutors said Tuesday.

Details of the criminal charges weren’t immediately available. They come after years of sexual misconduct allegations, made in civil lawsuits and the media, from young people who said Jeffries lured them with promises of modelling work and then pressed them into sex acts.

Jeffries’s attorney, Brian Bieber, said by email he would “respond in detail to the allegations after the indictment is unsealed, and when appropriate,” but planned to do so “in the courthouse — not the media.” 

Information on attorneys for the other defendants wasn’t immediately available.

Brooklyn-based U.S. Attorney Breon Peace and FBI and police officials were set to hold a news conference later Tuesday.

Jeffries left New Albany, Ohio-based Abercrombie & Fitch in 2014.

Previous lawsuit raised allegations against Jeffries 

One civil lawsuit filed in New York last year accused Abercrombie of allowing Jeffries to run a sex trafficking organization during his 22-year tenure. It said that Jeffries had modelling scouts scouring the internet for victims, and that some prospective models became sex trafficking victims.

Abercrombie last year said it had hired an outside law firm to conduct an independent investigation after a report on similar allegations was aired by the BBC.

The BBC investigation included a dozen men who described being at events involving sex acts they said were staged by Jeffries and his partner, Matthew Smith, often at his home in New York and hotels in London, Paris and elsewhere.

When the civil lawsuit was filed in New York last year, Bieber declined to comment on the allegations.

Published at Tue, 22 Oct 2024 14:11:20 +0000

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