National Automobile Dealer Association's CEO Peter Welch said Tuesday that climbing car prices will reach a point where they're not long sustainable. At the Automotive News World Congress on Tuesday, Welch said that he fears more American buyers will be priced out of the market.
Automotive News reported that the average new vehicle cost $35,377 last year and average monthly payments reached $538. Interest rates for new cars hovered around 5.76 percent, while used car rates rose to around 9 percent.
Americans continue to stretch out their auto loans, too, to make a payment more affordable. On average, American car buyers financed a new vehicle for 64.3 months.
Welch said part of the rise can be attributed to more buyers purchasing luxury pickup trucks that cost far more than the average car, and it's made for a spike in car payments that cost $1,000 per month. It's here where Welch said a lot of experts don't believe the trend is sustainable.
If the trend does stick around, the average new vehicle could soon cost $40,000 with an $800 payment due once a month. Welch said the trend makes him wonder if climbing car prices leave open a gap for a new Henry Ford to come along and offer more affordable vehicles.
This year, though, the NADA expects healthy sales, though they'll likely be down compared to 2018. It forecasts 16.8 million sales in 2019, which would be down from 17.3 million sales in 2018. Yet there's reason to remain optimistic for good years ahead, he hinted. An overall strong economy, high employment, and healthy GDP will likely keep sales flat in a strong range in the near-term.