As loan terms continue to stretch further into the future, spending on new-car purchases hit a new all-time high in May 2015.
Consumers spent a record $52 billion on their vehicles of choice, The Detroit Bureau reports, with help from a decline in incentives compared to the same time in 2014. The average transaction price climbed 4 percent in May 2015, as well, coming to $32,452 on a new vehicle.
Meanwhile, premium brands saw the biggest boost over the first four months of this year, with sales climbing 10.8 percent over last year; mainstream brands saw only a 4.8-percent gain in comparison.
The all-time high came from a two-pronged collaboration of incentive reduction — only General Motors, Hyundai, Kia and a few others kept their incentives — and an ongoing surge in truck, SUV and large sedan sales, the latter the result of falling fuel prices.
As for how consumers are paying for their increasingly expensive purchases, most are signing loan contracts with terms averaging 67 months. This allows consumers to pay for their new ride without breaking the bank, but also locks them into their chosen vehicle for a good while, lest they find themselves underwater come trade-in time. The latter point also suggests a potential slowdown in sales down the road.
[Photo credit: Greg Gjerdingen/Flickr/CC BY 2.0]
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