Interesting news came from Monday’s auto sales release that it will offer a surprise a sector of the stock market and middle-class consumer.
Nothing like the 18.4 million new vehicle hit in December was seen since 2005, but economists are hopeful for 17 million new vehicles sale in the month of March. The secondary effects are also expected as the sales are peaking up and prices are all set to drop.
According to the reports of Ally Financial, vehicles that are on lease and used can have their prices fall sharply this year. Used-car prices can drop between 25% and 50% by 2021, said Morgan Stanley.
Between, stock market is taking notes as .SPCOMAUTR is down 6.5% year to date, with AAP.N, (AN.N) and SAH.N fall double digits in 2017. However, Carmax, a leader in the used-car industry, has stocks down by 8% so far in this year.
As per the industry insiders more price cuts could be expected as the market is tightening.
Co-manager of the AdvisorShares Ranger Equity Bear ETF, Mr. Brad Lamensdorf said, “There’s an avalanche of used cars ready to hit the market place.”
“The competitiveness of the industry continues to be evident in ever-rising incentive levels. Incentives will reach a new high for the month of March.” said Deirdre Borrego, senior vice president of automotive data and analytics at J.D. Power in a note.