Here is this week’s recap on this week’s trends in the economy and the automotive industry designed to help dealers ask the right questions and look for the partners and resources to grow and profit in any market condition.
All Things Used Cars Economic Outlook: Source
- Income withholding threshold increases for consumers starting in January 2024:
- This year, the tax brackets are shifting higher by about 5.4%. The higher thresholds where tax rates take effect could mean savings for millions of Americans across all income brackets.
- 2025 Tax Season Returns will increase buying power for consumers:
- The IRS announced last month an increase in standard deductions for this upcoming filing year to combat the mild recession ahead.
- Potential Fed Rate Reduction in Q2 and Q4 to stimulate the economy and pull us out of this mild recession expected in 2024.
New and Used Cars Outlook: Source
- December used car inventories available supply has reached 2022 levels your year but is still significantly behind 2019 and 2020 levels.
- The average listing price for used vehicles in the market has stayed between 26 and 28,000 all year with the highest retail prices happening in the middle of the year. Currently, we’re sitting at March’s retail price of $26,000.
- The new car average vehicle transaction price has stayed soft most of the year.
- With a healthy supply coupled with OEM incentives buying down interest rates, new cars are expected to stay steady. However, due to affordability issues in 2024, Cox Automotive is forecasting very little change in 2024 new car sales.
Wholesales to Retail Trending: Source
- Wholesale used-vehicle prices (on a mix-, mileage-, and seasonally adjusted basis) increased 0.3% from November in the first 15 days of December.
All Things Used Cars Summary: Source
- Our guidance at The Automotive Advisor Team is to prepare now for a steady and slightly greater tax season than expected for used cars.
- The Feds and the Market’s pent-up demand say 2024 should start as good if not better than 2023. In that scenario, the cost of acquiring vehicles will increase month after month.
- What feels like overpaying today for inventory in that environment will prove to be underpaying a few weeks later. The reverse I also true, if you sell down or slow your buy strategy today, you could be substantially overpaying later in Q1 to catch up.