New auto sales drop…

Debt-strapped millennials. Ride-sharing apps. Self-driving technology. The list continues to grow as evidence of “peak car” mounts.

Now it’s time to add a shift to used-car sales to the list, according to a recent report from CFRA Research. Rising prices for new vehicles over the past few years have accelerated the change in consumer behavior.

The trend is particularly pronounced among the highest-quality borrowers, whose take-up rates for used-car financing rose from a year ago, according to the report. The percentage of “prime” credit consumers financing used cars hit a record high of 62% in the first quarter of 2019.

“In our view, the fact that the most qualified consumers are increasingly gravitating toward used vehicles is a potential red flag for automakers who continue to push the limits of consumer affordability,” wrote Garett Nelson, the author of the report.

Fears that the US auto market has already seen “peak car” sales have been a growing source of worry for the industry. New car sales at General Motors fell for the third year in a row in 2018 — to 2.95 million vehicles, a drop of nearly 50,000 from 2017. Ford sales have also declined over the past three years, coming in at 2.48 million in 2018, down 9,000 from the previous year.

And that’s not all. Sales of ultra-luxury cars have been hit particularly hard as demand for Aston Martin, Lamborghini, and Rolls Royce vehicles has fallen sharply, according to the USA Today, citing the data-analytics firm Thinknum.

“In our view, the peak in auto sales is clear,” said Bank of America’s Michelle Meyer and Anna Zhou in a client meeting. Other analyst support that view.

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