Current Automotive Industry Challenges

The automotive industry is currently facing significant challenges, primarily stemming from the impact of COVID-19 on sales, which remain below pre-pandemic levels. As dealer inventories increase and consumer resistance to rising prices grows, incentives are on the rise, particularly as leasing options return to pre-pandemic levels. The average lease rate has risen to approximately 25%, indicating that many consumers may be struggling with traditional financing. This trend raises concerns about the future profitability of manufacturers, as existing residual values used for leasing estimations become less reliable in a cooling market.