Our Philosophy:

We see the automotive operation is like our body’s circulatory systems. Your dealer operations are your heartbeat, your inventory acquisition strategy is blood flow, and your kidneys are your consultants, data-analytic tools and software that optimize that blood flow. How is your circulatory system??  If your blood flow (inventory) is restricted, even if you have optimal heart and kidney healthy, you’re still lethargic efficient, and slow. If your inventory (blood flow) is optimal, but your heart is not healthy the same thing happens.  If you have optimal blood flow and a fully functioning heart, but the blood is dirty (aging inventory or heavy wholesale % or pricing strategies/CTM/PTM is out of balance) the result is the same. We need the kidneys to clean that blood flow.

 

Economic Update: Source

  • Board, the US economy is projected to enter a short and mild recession around the turn of the year.
  • IHS Markit predicts a 0.2% increase in the consumer price index (CPI) in November 2023
  • UBS Group says in 2024 The US economy will slip into a mild recession. Due to that:
    • The Federal Reserve will slash interest rates by an eye-popping 275 basis points next year, according to UBS.
  • The expectation is that unemployment conditions will encourage the central bank to als0 start easing.

New: Source

  1. Days’ supply of new vehicles rose to 67 in October.
  2. The highest supply was for large trucks, while crossovers and sedans were in the lowest supply.
  3. Large trucks had the largest supply entering November.

Used: Source

  • The supply of unsold used vehicles on dealer lots across the U.S. was down 4% YOY
  • Used retail days’ supply began November with 49 days four days lower than November 2022 of 54
  • The lower the price segment, the tighter the inventory with days’ supply increasing with every higher price segment
    • Used vehicles priced under $10,000 had a days’ supply of 32,
    • $35,000 category with the highest days’ supply of 58.

 

Retail Price Trends: Source

New: Year to date, new-vehicle transaction prices have fallen more than 3.5%

Used: The average used vehicle listing price of $26,533 at the beginning of November was down 3% YOY

Wholesale: Meanwhile, according to the Manheim Used Vehicle Value Index, wholesale used-vehicle prices decreased 2.3% in October from

  • The overall Car segment decreased -1.13%. up from -0.57% last week.
  • The Truck segment decreased -1.73% compared to -1.12% last week.
  • The Used Retail Days-to-Turn estimate is up and is now sitting around 50 days.

 

Summary:  Source

The market is slowing, and valuations are declining week after week. But if you look at the rate of the cost to own a car vs the cost of selling that car the margin grows to the good. The rate of retail price drop is less than the rate of wholesale price drop. But you have to have an optimally performing circulatory system in your dealership to take advantage of the market.  We have a program to keep that system running optimally. If your cardiovascular system and circulatory systems are in jeopardy, you would stop everything to fix it before you have a heart attack and die. This is no different and requires the same surgical attention and priority. How is your circulatory system?

To read the full report and source references, click HERE.

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