US new car crisis: one million buyers exit as prices hit Rp800m

The US automobile industry is currently facing bitter economic realities. Approximately one million potential buyers have reportedly left the new car market since the start of the decade, with analysts predicting they are unlikely to return anytime soon. This phenomenon marks the end of automotive executives’ hopes for a return to pre-pandemic sales volumes.

Major automakers such as General Motors (GM), Ford Motor, and Toyota are adjusting their business plans, projected to see a decline or stagnation in new car sales this year. The primary causes are consumers growing frustrated with persistent inflation, rising fuel prices due to the Iran conflict, and high interest rates pushing average new car prices to $50,000 (around Rp812.5 million).

Interestingly, despite stagnant sales volumes, companies like GM and Ford continue to report solid profits. This is because manufacturers are focusing on selling high-margin trucks and luxury SUVs rather than cheaper models or sedans.

‘I wouldn’t say automakers are happy with current sales levels, but the reality is they are,’ said Ivan Drury, an automotive analyst at Edmunds. Unlike in the past when manufacturers would slash prices to chase market share, they now discipline themselves to maintain high prices for profitability.

This situation leaves few options for middle-income consumers. Used car prices are also rising, forcing many to keep their old vehicles longer. S&P Global data shows the average age of cars on US roads has reached 13 years, a record high.

Erik Severinson, Volvo’s Chief Commercial Officer, described the situation as a genuine threat to the entire industry. ‘This proves there’s something fundamentally wrong with the broader economy, as people can no longer afford new cars,’ he emphasised.

In addition to market factors, carmakers must also bear billions of dollars in additional costs due to Trump-era tariffs. Ford, for instance, faced an extra $2 billion in tariff costs last year. Meanwhile, reassessed investments in electric vehicles ( EVs) are adding to corporate balance sheets.

For consumers like Sal Arevalo, a government employee in Los Angeles, the reality is harsh. After seeing dealership prices, he decided to cancel his plans to replace his car. ‘The bitter truth has arrived. I might have to do what others are doing: keep my vehicle as long as possible,’ he concluded.