Published on Friday, September 05, 2008
By LA Daily News Staff Writer
New vehicle prices are falling at the fastest rate ever recorded, a team of analysts said Thursday, squeezing automakers' profit margins at a time of slumping sales but setting the stage for a sales rebound once the economy improves.
JPMorgan auto analyst Himanshu Patel and economic analyst Marc Levinson said in a research report that the average price of a new vehicle in the second quarter fell 2.3 percent from a year earlier to $25,632, citing government data. That's the steepest drop recorded in the bank's 41-year-old survey, the analysts said.
The price drop comes as automakers are already cope with mounting losses, declining sales and a shift away from high-margin trucks and sport utility vehicles toward lower-priced cars.
Although vehicle sales are expected to remain weak in the near term, the analysts said, the price decline is leading to better affordability and could translate into a big recovery for auto sales by the second half of 2009
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