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U.S. auto sales are projected to grow at a weaker pace in the third quarter from a year earlier, according to industry experts, as inflationary headwinds continue to push consumers away from considering new vehicles.
Carmakers benefited from a surge in new orders for crossovers and pickup trucks over the years, but, that growth has tapered off as buyers struggle to navigate higher expenses.
Market research firm J.D. Power estimates overall new vehicle sales to be up 0.2% at 3,882,600 units in the third quarter.
Buyers are also opting for more affordable models such as compact pickup trucks and SUVs such as Ford's Maverick.
Subcompact SUVs and compact cars are two of the hottest vehicle segments right now, helped by their relatively affordable price tags, said Charlie Chesbrough, senior economist at Cox Automotive.
Industry experts expected automakers to rebound with stronger sales in the third quarter, however, discounts offered by companies and the U.S. Federal Reserve's interest rate cut were not enough to invigorate demand.
According to data from Cox, General Motors is still expected to retain its top spot in the quarter, but will experience a 3% drop in sales. Toyota Motor's North America unit and Ford are expected to take the next two spots.
However, auto research firm Edmunds expects quarterly overall new U.S. vehicle sales to be down nearly 2%.
Edmunds analysts also flagged other potential snags for automakers in the country such as possible disruptions from the East Coast port strike.
Shares of Ford and GM closed down about 2% and 3%, respectively, on Monday after Chrysler-parent Stellantis said it would cut its 2024 profit forecast and warned it will burn through more cash than expected.
"Consumers in the market continue to be pressured by high interest rates and slow-to-recede vehicle prices, which are translating to high monthly payments," said Chris Hopson, principal analyst at S&P Global Mobility.
(Reporting by Nathan Gomes in Bengaluru)