What CAR is Checking Out

Check out what CAR has been checking out! We asked some members of the Center for Automotive research team to share what they have been reading, watching, or listening to recently.

What Yen is Checking Out: 

• What will high vehicle prices and interest rates mean for the auto finance market in 2024?
• New-Vehicle Retail Sales Increase in April but Fleet Sales Decline
• Consumer demand shifts towards smaller vehicles due to affordability concerns

Yen’s Thoughts:

The soaring new vehicle prices coupled with high interest rates create an affordability challenge for U.S. consumers. In April 2024, the average new vehicle transaction price stood at $45,093, a decrease from its peak in December 2022 but still over 20 percent higher than pre-pandemic levels. In addition, escalated auto loan interest rates exacerbate the problem, with the average 60-month new car loan rate reaching 8.22 percent compared to 5.31 percent in 2019.

As a result, the monthly auto loan payment for a standard 60-month loan has ballooned to $917, marking a staggering 34 percent jump from $684 in 2019. The sharp increase in auto loan payments has forced many consumers out of the new motor vehicle market.

The issue of vehicle affordability not only impacts consumers but also has long-term consequences for the automotive industry and the environment. Automakers are forced to scale back production and workforce, and more consumers are turning to the used vehicle market, which often offers less fuel-efficient vehicles with higher greenhouse gas emissions. This trend undermines both economic growth and environmental sustainability in the long run.

What Prasad is Checking Out: 

• Moving 12-Month Total Vehicle Miles Traveled (M12MTVUSM227NFWA) |FRED | St. Louis Fed (stlouisfed.org)
• 2024 Progress Report on the National Roadway Safety Strategy (transportation.gov)
• NHTSA Finalizes Rule on Automatic Emergency Braking | NHTSA

Prasad’s Thoughts:

In February 2024, the St. Louis Fed recorded a 12-month moving average of about 3.268 trillion vehicle miles traveled (VMT) in the United States bringing this measure close to the pre-pandemic high of 3.285 trillion VMT noted in Feb. 2020 and up from a pandemic period low of 2.832 trillion VMT in Feb. 2021. The St. Louis Fed chart illustrates data obtained from the U.S. Federal Highway Administration and offers a rich background against which we can overlay other data to draw inferences on the work ahead for us all — for public policy making, private investments or for the role of technology, and for transportation research, more generally.  A case in point is the U. S. National Highway Transportation & Safety Administration (NHTSA) data on highway fatalities. NHTSA numbers point to highway fatalities remaining stoically above 40,000 per year.  The pandemic period saw an increase in annual highway fatalities (42,939) a level not seen since 2005.  This was counterintuitive as VMT in 2021 was lower than the bracketing years (as mentioned above).

All this then brings us to what are we, as a nation, doing about this loss of lives? The 2024 Progress Report from the U.S. Department of Transportation (U.S. DOT) outlines this well.

Technology will need to come to the rescue of technology, powered by human ingenuity and the recent rule making by NHTSA on automatic emergency braking or AEB is an example of this expectation.  AEB is just the beginning on the much needed focus and investments needed to drive towards “zero” highway fatalities.

What Snehasis is Checking Out:

• U.S. will require automatic emergency braking in cars; it could improve the unreliable technology | Morningstar

Snehasis’ Thoughts:

“NHTSA’s data says that the rule will save at least 360 lives a year and at least 24,000 injuries annually “. Although most new cars have made the automated emergency braking standard, regulators want to mandate it to make it more effective and reliable.

This poses a new challenge for the technology on a couple of fronts: the first front is detection including all the sensors in the vehicles and all kinds of weather conditions. The second front is the faster and more reliable response from the braking system. The industry should transition quickly towards electric brakes and use the latest breakthroughs.