Automakers and dealers have an affordability problem that continues to get worse, at least some of which is of their own making. And if they don’t deal with the issue soon, it threatens to place new vehicles permanently out of reach for an uncomfortably large percentage of consumers.
Automakers and dealers have enjoyed an unprecedented run of record profitability after the pandemic disrupted global production and left consumers surprisingly flush with cash. With parts supplies constrained, automakers focused their production efforts on their most profitable nameplates and trim levels. Meanwhile, limited vehicle availability increased consumer competition, adding upward pricing pressure.
Automakers say that production constraints are easing, but they are not yet back to normal. Meanwhile, fleet buyers, whose purchasing options have been just as constrained by production limitations as that of retail consumers, are finally starting to see their longstanding orders filled by automakers.