DETROIT — Average American consumers getting priced out of the new-vehicle market is "probably the biggest thing" that Peter Welch worries about, the CEO of the National Automobile Dealers Association said Tuesday at the Automotive News World Congress here.
Welch said the latest figures he's seen — through October of last year — show new vehicle retail prices hitting an all-time high of $35,377, with an average monthly payment at $538 and interest rates up to an average of 5.76 percent on new vehicles and to about 9 percent on used ones. Loan terms are longer than ever, and now average 64.3 months. And the number of vehicles delivering $1,000-a-month payments has never been higher, he said.
"You know, people buying $55,000 pickup trucks with $1,000-a-month payments — I've never seen it," Welch said. "A lot of people don't think that's sustainable."
Welch said most of the customers at NADA's 18,500 dealer rooftops aren't affluent buyers — they're a single mom buying a used Toyota Corolla, for example. As pressure on affordability mounts, Welch said cost can go "hand in hand" with government regulation. While stressing that he's not taking a position on the government mandating things such as fuel economy standards or new safety features, "they all come with a price," he said. He added that new-vehicle prices appear headed toward hitting $40,000 with $800 payments.
"That is going to put a giant dent in the SAARs and it almost makes me wonder if at some point we're going to see another Henry Ford," offering new and more affordable vehicles, Welch said.
Also, on what's happening in Washington:
"We have the disruptor in chief in the White House right now," Welch said of President Donald Trump, adding that it's been "a very interesting two years in the administration." From a business perspective, most people have applauded the Trump administration's tax reform bill, he said. And Welch said he thinks it's good that things such as trade deals get renegotiated from time to time, adding that the North American Free Trade Agreement's renegotiation into the U.S.-Mexico-Canada Agreement "was huge."
But tariffs remain a concern. "The stakes are very high for everyone in this room," Welch said.
The NADA's import-focused dealers, in particular, "will not be able to survive even with a $1,000 tariff on a car," he said.
On mobility and the death of car ownership:
"When you talk to the consumers — and this obviously can change in five years, or 10 years, whatever — but when you're listening to them today, what they say is very different from what I'm reading in Popular Mechanics."
All of NADA's survey data points to Americans still wanting to own cars, he said.
On the market outlook for 2019:
NADA is calling for 16.8 million new light vehicles to be sold in 2019, down from 17.3 million in 2018. But Welch noted there are several positive economic indicators, such as high employment rates, a solid GDP and a healthy economy overall. "I don't know why we can't have a few more good years on a plateau," Welch said. "I'll take a plateau between 16.5 and 17 million for as long as we can't get them."
