All Things Used Cars: Economic Outlook: Source

Staying on next year’s interest rate outlook a little longer, things are slowing in the labor market, it’s not enough to cause a panic about unemployment. The October jobs report with the economy adding just 150,000 jobs and the unemployment rate ticking up to 3.9%

Over the past three months, average hourly earnings for all employees have jumped 3.2% but the biggest risk to our stability is that the softening of the job market could turn into a serious downturn,

The unemployment rate is already above the Fed’s year-end forecast of 3.8%. If the jobless rate might surpass the Fed’s year-end 2024 prediction of 4.1%, that would open the door to interest-rate cuts relatively quickly helping used car demand.

 

Acquisition Market Trends: Source

 Week over Week Summary

    • Continuing to decelerate, the 3-year-old index decreased 0.1% to 87.4%.
    • Non-luxury flat and luxury down 0.4%
      • Luxury: Luxury cars down 0.5%; SUVs down 0.3%
      • Non-Luxury: Compact cars flat; Midsize cars up 0.2%; Midsize SUVs up 0.7%; Entry SUVs down 0.2%
      • Pickups down 0.4%
    • Lane efficiency rebounded after Thanksgiving week, up 8.0% pts to 58.4%.

Year over Year Trends:

    • Pickups, SUVs, and vans lost less than the industry’s year-over-year decline of 5.3%, at 4.2%, 4.8%, and 5.0%, respectively.
    • Compact cars continued to slide, down 10.7%,
      • Midsize cars were off by 8.0%, and
      • Luxury lost 6.1% year over year.
    • Pickups lost 2.8%, midsize cars were down 2.1%, and SUVs were equal to the industry, with a 1.6% decline.
    • Compact cars and vans, down 1.3% and 0.7%, lost less than the industry in month-over-month declines.

Wholesale to Retail Spread:

    • The sale price of used cars and the buy price of those used cars is approximately $3700.
    • The non-luxury looks to be stabilizing in value at around 89%.
    • The Luxury is continuing its steep decline ending at 84% this week with no end in sight.

Summary: Source

  • We have heard how hard it is right now, but the truth is, that the economy is strong, the retail market is stable, and the IRS is open to reducing rates in 2024.
  • Add Tax season to that with the IRS recently announcing new tax guidelines that are designed to put more money back into shoppers’ pockets and we have much to look forward to.
  • You can find the specifics of those rate reductions and income tax bracket and inflation adjustments in our weekly auto market report. Reach out for a free analysis of your year-end and 2024 strategy HERE.
John Ellis CEO & Founder of The Automotive Advisor Team, LLC

Author: John Ellis

Founder & CEO The Automotive Advisor Team, Inc. BEVEveryting, Inc. Double E Consulting, Inc.

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