Economic Outlook: Source

  • The 3-month market dealer confidence index outlook index matched an all-time low of 41, indicating more dealers feel the market will be weak, not strong, in the months ahead. The market outlook index in Q4 for franchised dealers dropped 12 points to 46, sinking below the 50 threshold and hitting an all-time low. The outlook index for independent dealers dropped one point to 40.
  • Our guidance along with some of the big data health is the first half of this year will be steady with signs of strength during the tax season and the first projected rate cuts in July. Reading the right data points is key. Consumer confidence is at 90% which is as high as January y2022 and 2% less than the highest in 3 years so 92%.
  • Having a growth mindset when appreciation is about to hit its peak season is important to keep from playing catch-up in February and March.

Wholesales to Retail Trending: Source

  • We moved over into the 2021 MMR model year index and the average price jumped from 28,600 to 32,900. A 4,300-dollar jump for a 3-year-old car.
  • Three-year-old lane efficiency is slightly lower than most previous years while 6-year-old lane efficiency is slightly higher than in previous years.
  • Used car sales started in January mixed with a days’ supply at 47 days.
  • New car sales started the year at a typical pace and days’ supply is currently at 74 days.

Manheim Index: Source

    • In December, Manheim Market Report (MMR) values saw above-average weekly declines in the final two weeks of the year. Over the last four weeks, the Three-Year-Old Index fell 1.4%, indicating values were falling faster than normal. Those same four weeks they delivered an average decline of 0.5% between 2014 and 2019.

Summary: Source

  • Cox Automotive is forecasting retail sales growth for new cars while retail sales growth for used cars is up 10%.
  • They are also predicting a year-over-year growth in the Manheim used vehicle index of half a percent.
  • We are advising our dealers to pay attention to affordability as the main driver of demand in 2024.
  • In the first half of the year retail sales will be driven through the tax season by need.
  • In the second half of the year, the retail demand will be driven by lower interest rates with higher income earners trading in newer vehicles.
  • Understanding that dynamic you can set your plan to maximize both economic environments attracting the right customer at the right inventory at the right time. Reach out for a comprehensive analysis of your strategy.
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.

LinkedIn page