Investors are punishing automakers’ stocks this week after second-quarter earnings reports exposed industrywide issues of slowing sales and high prices. That has come just as the companies are having to spend huge sums to make new electric and gas vehicles.
FILE - A line of unsold 2024 F150 and Lightning electric pickup trucks sit at a Ford dealership Sunday, May 19, 2024, in Denver. Investors are punishing auto company stocks this week, Thursday, July 25, after second-quarter earnings exposed industrywide issues of slowing sales and high prices in the face of huge capital investments in electric and gas vehicles.
Shortly after the coronavirus pandemic spread worldwide in 2020, automakers had to slow their factories due to a global shortage of computer chips. At the time, high-income buyers who couldn’t spend money on travel or restaurants started paying above sticker prices for a limited supply of pricey loaded-out vehicles. Automakers used their limited production to build only expensive stuff, and prices soared nearly 27% from pre-pandemic levels.
The average price of a new vehicle in the U.S. peaked in December at $48,408, according to data from Edmunds.com. It dropped a little to $47,616 last month. Discounts, which were minimal or nonexistent for the past few years, rose to an average of $1,819 per vehicle in June. Stellantis’ earnings were crimped by a poor performance in North America. Tavares said the company’s prices are too high, causing potential buyers to leave showrooms without hearing about low-interest financing and other discounts.Such demands have put Stellantis in a squeeze between offering lower prices, and inflationary pressures on the business, Tavares said. Stellantis, he said, must reduce costs to preserve profit margins at lower prices — something that all automakers are now facing.
Stellantis NV Carlos Tavares Auto Industry General News Personal Finance U.S. News A Business Tesla Inc. Earnings Federal Reserve System N Electric Vehicles F U.S. News
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