While shoppers scrambled to purchase new vehicles ahead of U.S. tariffs during the spring, that momentum has since faded, Bloomberg reported Tuesday (July 1).
The annual automotive selling rate likely dropped to 15 million in June — the slowest pace in the past year — from 17.6 million in April amid consumer caution about major purchases, the report said, citing data from JD Power.
With car prices projected to climb even higher as companies deal with billions of dollars in tariff costs, the situation may only deteriorate, according to the report.
“The party is over,” said Jonathan Smoke, chief economist for researcher Cox Automotive, per the report. “It’s clearly slowing. It’s because of affordability getting worse and forcing what we think will be production declines to keep supply in balance.”
The report came amid ongoing anxiety among consumers. The latest edition of the University of Michigan’s Consumer Sentiment Index showed that while consumers felt better about their personal finances and business conditions, there were still concerns about a potential economic slowdown and ongoing inflation risks.
In addition, data on personal income, spending and saving released last week by the Bureau of Economic Analysis “painted a portrait of a pinched consumer,” as PYMNTS wrote.
Those figures showed personal income slipping 0.4% month over month in May, marking the first monthly decline since September 2021, and ending an upward trend.
Meanwhile, the PYMNTS Intelligence report “Shoppers Pull Back as Half of US Consumers Expect Tariffs to Raise Prices at Double the Rate of Inflation,” a Visa Acceptance Solutions collaboration, found that nearly half of Americans expected tariffs to raise prices at twice the inflation rate.
Eight out of 10 consumers said they were taking steps to blunt the impact of tariffs. The most common action to manage spending consisted of consumers buying less overall. To prepare for anticipated price increases, 38% of consumers planned to forgo purchases.
Additionally, 31% of all consumers switched to less expensive brands, and 29% delayed or avoided major purchases. On another front, 22% canceled or reduced their subscriptions or memberships. Another 14% were using credit cards or buy now, pay later more.
