New-car sales plunge: Supply constraints and rising prices limit buyers

U.S. auto sales dropped sharply in the second quarter, according to estimates, as automakers continue to deal with supply chain problems, declining consumer sentiment and rising interest rates.

Why it matters: The auto industry remains a significant engine of the U.S. economy — and a decline in sales may portend a broader pullback in consumer spending.

By the numbers: All but one of the major automakers posted double-digit sales declines in the second quarter, according to estimates by car-research site Edmunds. Automakers will release official second-quarter figures beginning Friday.

• Yes, but: Automakers are enjoying strong profits on a per-vehicle basis, Autotrader analyst Michelle Krebs tells Axios.

Between the lines: The global semiconductor chip shortage continues to restrict production capacity, limiting supplies of new cars, trucks and SUVs. Automakers have prioritized higher-profit models, Krebs says.

• McKinsey predicted earlier this month that the chip shortage would last three to five years.

Be smart: Sky-high prices — now averaging more than $47,000, according to Kelley Blue Book — are also hurting sales, driving more buyers into the used market.

• Edmunds reported on Thursday that more than 1 in 9 new-car borrowers in June agreed to monthly payments of $1,000 or more.

(Editor's note: Cox Enterprises, owner of Autotrader and Kelley Blue Book, is an investor in Axios.)