September 5, 2008 in City

New car prices are plummeting

 

New vehicle prices are falling at the fastest rate 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.

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.

WASHINGTON

30-year mortgage rates fall further

Rates on 30-year mortgages fell for a third straight week, dropping to the lowest level since mid-July.

Freddie Mac, the mortgage company, reported Thursday that 30-year, fixed-rate mortgages dipped to 6.35 percent this week, down from 6.40 percent the previous week. It marked the third consecutive decline and left rates at the lowest level since July 17 when they stood at 6.26 percent.

The 30-year mortgage, which hit a high for this year at 6.63 percent on July 24, has been above 6 percent since late May as financial markets have become convinced that rising inflation pressures will keep the Federal Reserve from cutting interest rates further to bolster the weak economy.

NEW YORK

Retailers report sluggish August

Back-to-school shoppers appeared to focus on deals and discounts, resulting in weak August sales at many stores.

Even lower gas prices may not offer retailers much relief in the months ahead as shoppers are still seeing personal incomes fall and food prices remain high. In fact, Wal-Mart Stores Inc. and warehouse club operators such as Costco Wholesale Corp. remain among the few bright spots as shoppers focus on the lowest prices.

As retailers reported their sales results Thursday, most mall-based apparel stores turned in sluggish results. Teen retailers that fared poorly included Wet Seal Inc., Abercrombie & Fitch Co. and American Eagle Outfitters Inc. And high-end retailers Saks Inc. and Nordstrom Inc. posted weaker results as their affluent customers start to feel pinched.

From wire reports


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