Economic Update: Source

 The United Auto Workers’ strikes came to Louisville, Kentucky, this week when the 8,700 workers at the Ford Kentucky Truck Plant held a surprise walkout. They join the 25,300 employees now on strike at other Big Three facilities across the country.

  • Home Mortgage Refinancing –62% of mortgages are below 4%, and 24% are below
  • Wage Growth –Wages are up 10.2% since 2019, equating to an additional $854 per month for families earning $100,000 annually.
  • The New-to-Used Value Proposition Changed – In 2019 the variance from used to new was $13,025, a 55% premium for buying new vs. used. Today, the variance is $6,314 or 15%.
  • Pent-Up Demand –Automakers produced 8.1 million fewer new vehicles vs. prior years. New vehicle inventories are up 68% vs. September ’22 driving sales gains.
  • Consumer Spending  Consumer spending was up 17% in September with Transportation and services leading the way.

Auto Market Insights: Source

  • Automotive Retail Sales: are up over 30% in New and 6% in used YoY.
  • Day Supply: New day supply is up 7% in new cars and 3% in used car supply. 
  • Used Pricing Used pricing has continued to soften 1% down from last week’s acquisition costs and ½% down in retail price.
  • Wholesale The wholesale conversion rate at the auction is sitting between 2022 and 2021 numbers this year and 55.1% but that is about to jump up with the continuing strike I suspect. The day supply in the wholesale market is down to 26 days. 3 days lower than this time last year 5 days lower than in 2019.

 

Summary: Source

Black Book reported last night that they see a trend of sellers increasing their floors. There is no doubt the longer the UAW strike goes on the more used inventory will be required to fill the funnel. The most impacted segments are showing that right now with three Truck segments increasing in value last week. Managing your inventory buy cadence and pricing strategy will require constant inspection of what we expect. We have a program that can help with that but it’s no doubt a hallmark of active leadership and leans into our topic today. Contact us HERE.