Tuesday, October 28, 2008

Tough times on the car lot

Transaction prices on new vehicles fell for the 10th month in a row in October in the U.S., according to the Power Information Network.
That drop is more bad news for automakers, which are seeing declining revenue, and likely, less profitability.
Falling profits have prompted automakers to cut production and jobs, which has contributed to the weakness in the economy.

PIN, a subsidiary of J.D. Power and Associates, said economic woes such as tight credit, low consumer confidence and high fuel prices are to blame for the drop in transaction prices.

Auto sales have fallen 12.8 percent so far this year, through September, compared with the first nine months of last year.

Also contributing to the slide in transaction prices is buyers' distaste for big trucks and SUVs, which carried larger price tags than the smaller, more fuel efficient vehicles that have come into favor.
PIN said the drop in transaction prices has worsened as the year has progressed. In the first quarter of the year, transaction prices fell by nearly 1.5 percent.
By the first three weeks of October, transaction prices sank by 7.7 percent.

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