The auto industry’s recent sales rebound—a whopping 55% uptick over the last five years—may finally be slowing down.
Translation: If you’ve been planning to purchase a new car, now just might be the right time to buy.
According to a study by consulting firm AlixPartners, car and truck sales in the U.S. will likely peak sometime this year, then slowly decline from there. One explanation? The Fed is expected to raise interest rates in the near future—which will affect the public’s purchasing power when it comes to new auto loans. The projected 3% rise in interest rates will lower consumer purchasing power by $2,500, and a 7% bump could lower purchasing power by more than $5,000.
Another explanation for the expected decrease in auto sales: By 2020, China’s auto sales growth rate will slow to 3% compared to last year’s 13.5%. “The sheer size of China means the rate of sales growth will slow down,” AlixPartners’ Mark Wakefield told CNBC.
Car sharing, a increasingly popular option, may become the go-to alternative for commuters. 1.3 million people this year participated in a car share, and it’s projected to jump to 4 million by the end of the decade.