The American consumers who were stretching themselves tobuy or lease a new car are starting to gomissing from showrooms.

Rising interest rates and new-vehicle prices aresqueezing shoppers with shaky credit and tight budgets out of themarket. In the first two months of this year, sales were flat amongthe highest-rated borrowers, while deliveries to those withsubprime scores slumped 9%, according to J.D. Power.

The researcher's data highlights what's happening beneath thesurface of a U.S. auto market in its second year of decline after ahistoric run of gains. Automakers probably will report sales inMarch slowed to the most sluggish pace since Hurricane Harveyravaged dealerships across the Texas Gulf Coast in August,according to Bloomberg's survey of analyst estimates.

“There's not a bubble of subprime. But as interest rates rise,it's going to affect” those customers first, said Dan Mohnke,senior vice president of U.S. sales for Nissan Motor Co. “That'sthe part of the market that's really coming down.''

When the financial crisis and recession hit the U.S. a decadeago, many Americans who had been affluent enough to buy newvehicles suffered investment and job losses that hurt their creditscores. During the recovery, lenders took chances on consumers withlower FICO scores, partially on the notion that borrowersprioritize car payments ahead of other expenses. Several financialcompanies started to tighten their standards more than a yearago.

Westlake Financial Services has specialized in subprime lendingsince its founding in Los Angeles thirty years ago. Subprime loansnow make up just 55% of its portfolio, down from 75% five yearsago, said David Goff, vice president of marketing.

“Subprime losses increased maybe to pre-recession levels a yearor so ago,” Goff said in an interview last month. “That caused youto require a little bit more from the subprime customer. And thosepeople, instead of buying a new car, are switching over to a usedcar.”

The silver lining for those who now find new models tooexpensive is that millions of lightly used cars and SUVs are nowcoming off lease, providing a good supply of better-equipped,nearly new models at falling prices.

AutoNation Inc. Chief Executive Officer Mike Jackson projectsthat even as new-vehicle sales slip again this year, the combinedsales of new and nearly new ones will increase, meaning morebusiness for the nation's largest dealership group and itspeers.

The annualized pace of new sales last month was probably about16.8 million cars and light trucks, according to the averageestimate of 11 analysts. That would roughly match the rate in March2017, which had one fewer selling day.

While rising interest rates under Federal Reserve Bank ChairmanJerome Powell will reduce consumers' buying power, tax reformpassed by the Republican-controlled Congress and signed byPresident Donald Trump largely benefited high earners and maysupport demand for premium brands and well-equipped models.

Through February, sales of vehicles priced at $40,000 and uprose by 4 percent, J.D. Power said, while those priced at less than$20,000 fell by 19%.

“On a macro basis, we do see that the luxury side continues togrow; prices continue to go up there,” Henio Arcangeli Jr., HondaMotor Co.'s top U.S. sale executive, said in an interview atBloomberg News headquarters in New York. “But more in the massmarket, pricing is staying firm, so I do say where the industry isprobably leaking is on the bottom.”

Copyright 2018 Bloomberg. All rightsreserved. This material may not be published, broadcast, rewritten,or redistributed.