Why the slump in new car sales

Aug 26 2010 The subprime crisis which led to the global slowdown had its ripple effect on the auto industry too and new car sales slumped quite dramatically due to job losses, cuts in pay and tight liquidity conditions. People were not also willing to risk his home equity in the wake of depreciating values as well as the interest rates rising. The herd mentality driving consumer behaviour was yet another reason for dwindling sales of new cars.
The fall out effect of this behaviour has seen the used car market thriving and many consumers have decided to wait for some more time to buy the new car. Other reasons like lower depreciation on used cars as well as lower insurance costs have also contributed to the increase in used car sales.
Car makers are however hitting back with much better offers on prices, better trade-in offers and cash rebates in order to liquidate their built up inventory. Car finance schemes are also being rolled out that are extremely competitive and friendly to those with good credit history reports and the effects are slowly beginning to be seen.

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