U.S. auto sales have reached 'recessionary levels,' new report states

Yahoo Finance auto reporter Pras Subramanian breaks down data from a new report indicating depressed U.S. auto sales amid rising inflation and interest rates.

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SEANA SMITH: You're looking at all facets of the car industry. RBC was actually out with a pretty interesting note. And they were talking about the car market right now. And they claim that we are at, quote, "recessionary levels." What did you make of that?

PRAS SUBRAMANIAN: I was a little surprised at how negative the report was, just based on what I saw in it. They did their tracking for the month of May, and they see a national average of 12.8 million vehicles sold in the year, which is kind of low. They said, quote, that there appears to be increasingly concerns about the economy, inflation, rising interest rates, and a recession. Now, we have seen the effects of inflation here, right? Prices are going up dramatically for used cars and also new cars. Also talking about interest rates, that's not helping matters either, right?

But at the same time, it's really, I think, a demand story. It's a problem of-- what I mean by that is there's not enough supply to meet that demand. There's so many people that need to replenish and re-- buy new cars to take care of their older vehicle fleets. So I think that's the best, the biggest year. And even Evercore has said that they see no conceivable weakness from the print, given zero inventory build over the last few months. So that's the problem, I think.