GMC vehicles are on display at the Sterling McCall Buick GMC dealership on February 2, 2022 in Houston, Texas.
Brandon Bells | beautiful pictures
TrueCar analyst Zack Krelle thinks consumers are already starting to worry about those high prices, especially as inflation pushes their other costs higher – and especially as interest rates continue to rise. .
“We’re seeing consumers facing the reality that to get the same car with the same monthly payment as last year, they’re forced to increase their down payment, which is creating new challenges. on affordability,” Krelle said in a statement Thursday. “With interest rates on the rise, affordability is being tested.”
It is likely that the profits of automakers will decline if the US enters a recession. That has put pressure on shares of auto giants like Ford Motor (down 27% in September), Synthetic engine (down 18%) and Volkswagen (down 13%), all of which are included in ETF holdings.
It also put pressure on the shares of vendors and startups in the electric vehicle and autonomous driving space, which make up the bulk of the ETF’s portfolio. Not only will the recession limit carmakers’ ability to invest in new technology, but higher interest rates – and the market weakness that can accompany a recession – will also make small companies more difficult to raise capital from other investors.
Most major automakers are getting ready to weather the recession. But many of the smaller companies in the electric and self-driving car sectors could struggle. Some of the names that have captured investor attention over the past few years are still far from sustainable and profitable. likely to need more cash in the next few years.
Some, like the EV . battery starter QuantumScape (a component of an ETF, down 21% in September) may not even have meaningful revenue for a few more quarters, much less profit.
Among other major ETF drivers in September:
- Lid manufacturer Luminar technology fell 13% for the month.
- Chinese electric vehicle manufacturers Nio and XPeng end of the month down 20% and 34% respectively.
- Electric heavy-duty truck manufacturer Nikola fell 35% in September.
– by CNBC Gina Francolla contributed to this report.