Pandemic lockdowns have cost millions of low-income Americans their jobs, while white-collar types who work from home are flush with cash they can’t spend on dining or travel. Instead, many of them are buying expensive new vehicles.
High-end crossovers, trucks and SUVs are flying off dealer lots, but sales of entry-level compact cars and crossovers remain depressed. General Motors' premium people haulers like the Chevrolet Tahoe and GMC Yukon SUVs saw deliveries rise more than 30 percent in the fourth quarter, but sales of the more affordable Chevy Equinox crossover sank 22 percent.
Toyota Motor Corp.’s Lexus GX midsize SUV, which starts at $53,000 but hasn’t had a full upgrade in a decade, posted big gains, and Volkswagen Group luxury brand Porsche had its second best year in the U.S.
“Those who have money are spending big on loaded SUVs and pickup trucks,” said Michelle Krebs, executive analyst for Autotrader, a unit of Cox Automotive. “Those at the other end of the spectrum -- many of them younger -- have been increasingly frozen out of the new-vehicle market because they have less-than-stellar credit and, with the pandemic, are more apt to have lost their jobs or had their income reduced.”
Light vehicle prices have been climbing for years, as automakers kitted out vehicles with expensive new technology and demand shifted to pricier SUVs and trucks. But plant shutdowns last spring constrained supply, pushing prices to record highs and making discounts scarce. That’s been great for manufacturer and dealer profits, but it’s shutting more Americans out of the market for new vehicles.
Low-paying work in services, where there’s more face-to-face contact with customers, tended to disappear first as economies locked down. And financial markets, where assets are mostly owned by the rich, came roaring back much faster than employment rates.
Some experts have said the upshot has been labeled a “K-shaped recovery” as the virus has widened income and wealth gaps across fault lines of class, race and gender.
