RAMSEY, N.J. – TechnoMetrica Market Intelligence didn’t have upbeat news for either dealerships or finance companies looking to turn new metal coming out of the holiday weekend.
The firm’s Auto Demand Index (ADI) — which measures the intent of consumers to buy or lease a new vehicle within the next six months — registered a sharp decline in May, falling 15 points from the previous month to a score of 91. This drop marks the second straight month for an index decline.
Meanwhile, the ADI’s three-month moving average also fell for the second month in a row, indicating what TechnoMetrica believes is a continued deceleration in momentum for vehicle purchase intent among U.S. consumers.
In addition, the share of Americans who plan to purchase or lease a new vehicle within the next six months declined three points from April to 15 percent.
TechnoMetrica president Raghavan Mayur explained the ADI is conducted monthly and is based on the response to a key question posed to more than 900 adult Americans: How likely is it that you will buy or lease a new vehicle within the next six months?
The firm pointed out the weakening in purchase intent is further demonstrated as analysts measured the index against the long- and short-term tracking rates.
May’s ADI score of 91 is 10 points below the 12-month moving average of 101 and trails the six-month moving average of 105 by 14 points. Thus, analysts at TechnoMetrica anticipate that new-vehicle sales will decrease “significantly” in the coming months.
TechnoMetrica contends a number of factors are contributing to the decline in the share of Americans who plan to acquire a new vehicle in the near future.
For instance in April, the cost of living in America rose at its highest rate in three years, according to a recent report from the Labor Department. As the price of gasoline continues to move higher, climbing 8.1 percent in April, and the cost of rent and medical care grows, consumers seem to be exercising caution in their spending habits. As a result, at least for the short term, TechnoMetrica thinks Americans are less likely to purchase higher priced items, such as automobiles.
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