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Yellow Light In US Auto Industry — Consumer Demand Problem Growing For Gas Cars

A recent article in Forbes highlighted that J.D. Power and LMC Automotive have found “a growing backlog of unsold new cars and trucks” across the country. The reason? Sales are down.

Well, technically, the USA has long had a consumer demand problem or two with gasoline cars — high demand for inefficient vehicles has caused an enormous amount of pollution, which causes heart disease, lung cancer, other cancers, asthma, and global warming. However, ignoring that topic for now, the companies that benefit financially for selling gasoline cars are facing a different demand problem. People are buying fewer and fewer gasoline cars.

A recent article in Forbes highlighted that J.D. Power and LMC Automotive have found “a growing backlog of unsold new cars and trucks” across the country. The reason? Sales are down.

The gas car sales are down pretty significantly across much of the market. As I reported a couple of weeks ago, vehicles sales were down for the following companies in January–May 2019 versus January–May 2018: Audi, Honda, Infiniti, Mercedes, Nissan, and Toyota. Furthermore, car sales for the same time period were down for these companies: Acura, Audi, BMW, Honda, Hyundai, Infiniti, Kia, Lexus, Mercedes, Nissan, Subaru, Toyota, and Volvo.

Part of this is surely due to  rising Tesla sales. Tesla sales probably totaled around 50,000–55,000 in the USA in January–May, which would be a bit more than the 45,200 vehicles sales lost across the above brands in the same period versus the first 5 months of 2018. As you can see, the car sales of those brands were down much more (189,020), but many of those sales losses were due to consumers switching to SUVs and crossovers.

With the Tesla Model 3 competing on cost with vehicles like the Toyota Camry, Honda Accord, and even Honda Civic — cars with much weaker performance, less advanced tech, less prestige, and lower safety scores — there’s still a great amount of room for electric car sales to grow in the mainstream car market. Furthermore, with the Model 3 beating the BMW 3 Series and every other midsize luxury car on performance while crushing the 3 Series and others on price, there’s also plenty of room for electric vehicle sales growth in the premium car segments.

Yes, there is a “consumer demand problem” and and perhaps a vehicle inventory problem in the US auto industry — but it seems to be a problem for gas cars, not for Tesla.

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Zach is tryin' to help society help itself one word at a time. He spends most of his time here on CleanTechnica as its director, chief editor, and CEO. Zach is recognized globally as an electric vehicle, solar energy, and energy storage expert. He has presented about cleantech at conferences in India, the UAE, Ukraine, Poland, Germany, the Netherlands, the USA, Canada, and Curaçao. Zach has long-term investments in Tesla [TSLA], NIO [NIO], Xpeng [XPEV], Ford [F], Amazon [AMZN], Piedmont Lithium [PLL], Lithium Americas [LAC], and Starbucks [SBUX]. But he does not offer (explicitly or implicitly) investment advice of any sort.


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