{"id":1092,"date":"2023-10-14T17:48:58","date_gmt":"2023-10-14T17:48:58","guid":{"rendered":"https:\/\/connectwithfund.com\/markets\/auto-stocks-have-a-problem-car-payments-have-gone-through-the-roof\/"},"modified":"2023-10-14T17:48:58","modified_gmt":"2023-10-14T17:48:58","slug":"auto-stocks-have-a-problem-car-payments-have-gone-through-the-roof","status":"publish","type":"post","link":"https:\/\/connectwithfund.com\/?p=1092","title":{"rendered":"Auto Stocks Have a Problem: Car Payments Have Gone Through the Roof"},"content":{"rendered":"
\n

Car buyers face some tough numbers. A record 17.5% of new-car buyers in the third quarter paid more than $1,000 a month for a vehicle, notes automotive data provider Edmunds. Three years ago, less than 7% of new-car buyers spent that much.<\/p>\n

Three years ago, the average interest rate to finance a new car was about 4.6%, adds Edmunds. Now, it\u2019s 7.4%. Three years ago, the average price for a new car was some $39,000. Now, it\u2019s $48,000. Those numbers imply that monthly car payments should be up 37%. In fact, they\u2019re up less than 30%. <\/p>\n

\n

The reason: The average down payment on a new car has almost doubled, from just over $4,000 to just under $8,000. The extra $4,000 knocks roughly $60 off average monthly payments. Buyers are financing 83% of a new car\u2019s value, compared with 89% three years ago.<\/p>\n

The average new-car loan term runs 68.3 months. Three years ago, it was 70 months. Paying back faster means higher monthly payments; the 1.7-month shift adds roughly $20 a month to payments. The 30% payment hike is also twice the 15% rise in wages. Something has to give. Car prices and interest rates may come down. Wages may rise.<\/p>\n

For investors, falling car prices are bearish for auto stocks. But falling rates and rising wages are bullish. Investors should watch loan lengths. If they begin to rise, that could be a red flag that consumers are finally getting stressed out. And then there\u2019s those gasoline prices. <\/p>\n

Write to <\/strong>Al Root at allen.root@dowjones.com<\/p>\n

Last Week<\/h4>\n

Markets<\/h2>\n

The Hamas attack on Israel drove up oil prices, gold, military stocks, and the dollar. Oil and bond yields fell. Israel placed Gaza under siege and formed a united government. The House GOP caucus failed to unite enough to elect a speaker, prolonging congressional paralysis. The September consumer price index edged up. Still, on the week, the
\n Dow Jones Industrial Average
\n rose 0.8%, the
\n S&P 500
\n was up 0.45%, and the
\n Nasdaq Composite
\n fell 0.18%. <\/p>\n

Companies<\/h2>\n

Canadian auto workers went on strike against
\n General Motors,<\/span>
\n then settled; the UAW targeted
\n Ford\u2019s<\/span>
\n biggest plant. The IRS wants $28.9 billion in back taxes from
\n Microsoft.<\/span><\/p>\n

PepsiCo
\n and
\n JPMorgan Chase
\n both beat expectations as earnings season began. Harvard\u2019s Claudia Golding won the economics Nobel Prize for her work on the pay gap between men and women.<\/p>\n

Deals<\/h2>\n

Trian\u2019s Nelson Peltz sought more
\n Walt Disney
\n board seats, including one for himself…
\n Bristol Myers Squibb
\n will pay $5.8 billion for Mirati Therapeutics…
\n Birkenstock
\n went public at $46 a share, an $8.6 billion valuation, then fell nearly 13%\u2026China\u2019s Country Garden warned it might not make payments on overseas debt\u2026The SEC wants to talk to Elon Musk about his disclosures during his Twitter buy…
\n Exxon Mobil
\n agreed to buy
\n Pioneer Natural Resources
\n for $49 billion…
\n Goldman Sachs
\n sold GreenSky to a Sixth Street\u2013led group for some $500 million…Microsoft closed its
\n Activision Blizzard
\n deal after getting U.K. approval, taking a big loss. <\/p>\n

Write to <\/strong>Robert Teitelman at bob.teitelman@dowjones.com<\/p>\n

Next Week<\/h4>\n

Monday 10\/16<\/h2>\n

Financials are the among the first companies to announce results for the third quarter.
\n Charles Schwab
\n leads off the week, reporting on Monday.
\n Bank of America,<\/span><\/p>\n

Bank of New York Mellon,<\/span>
\n and Goldman Sachs Group follow on Tuesday. Morgan Stanley and U.S. Bancorp release earnings on Wednesday, and
\n Truist Financial
\n on Thursday.
\n American Express
\n closes out the week by announcing results on Friday.<\/p>\n

Tuesday 10\/17<\/h2>\n

\n Johnson & Johnson
\n headlines earnings for S&P 500 Healthcare stocks, which are down 4.3% this year; it announces results on Tuesday.
\n Abbott Laboratories
\n and
\n Elevance Health
\n report on Wednesday.
\n Intuitive Surgical
\n releases results on Thursday.<\/p>\n

The Census Bureau <\/strong>reports retail sales data for September. Consensus estimate is for retail sales to increase 0.3% month over month. Excluding autos, sales are expected to rise 0.2%. In August, retail sales rose 0.6%, as did sales excluding autos.<\/p>\n

Wednesday 10\/18<\/h2>\n

\n Netflix
\n and
\n Tesla,<\/span>
\n whose shares are up 21% and 104%, respectively, this year, report quarterly results. Shares of both companies fell more than 8% the day after they released earnings in July, as their stocks\u2019 performance this year had set a high bar to clear.<\/p>\n

Email: <\/strong>editors@barrons.com<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Car buyers face some tough numbers. A record 17.5% of new-car buyers in the third quarter paid more than $1,000 a month for a vehicle, notes automotive data provider Edmunds. Three years ago, less than 7% of new-car buyers spent that much. Three years ago, the average interest rate to finance a new car was about 4.6%, adds Edmunds. Now, it\u2019s 7.4%. Three years ago, the average price for a new car was some $39,000. Now, it\u2019s $48,000. Those numbers imply that monthly car payments should be up 37%. In fact, they\u2019re up less than 30%. The reason: The average<\/p>\n","protected":false},"author":1,"featured_media":1093,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[39],"tags":[],"class_list":["post-1092","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-markets"],"yoast_head":"\nAuto Stocks Have a Problem: Car Payments Have Gone Through the Roof | ConnectWithFund<\/title>\n<meta name=\"description\" content=\"Car buyers face some tough numbers. 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