Current Automotive Economic Outlook:
We’re in a bifurcated market again as total spending is up 12% year over year and almost every category, including repair shops and transportation, grew. However, consumer confidence did dip a little bit in the first week of August which tells us consumers are not sure how they feel about the next few months or the rest of this year. We’ll keep an eye on that but the implications for automotive retail at this point should be minimal. Reach out to the team for a deeper dive into the economics and how that can enhance your current automotive strategy.
New Car Market’s Current State:
- The active supply of new vehicles stood at 1.96 million at the end of July.
- The average listing price remained above $47,000 at $47,048.
- inventories led to richer incentives and robust sales.
Used Car Market’s Current State:
- Used-vehicle inventory rose to 2.25 million units at the end of July.
- Used days’ supply stood at 45, a decrease from June.
- The average used vehicle listing price decreases slightly but remains above $27,000.
- The average used-vehicle mileage was listed at 69,950
Wholesale Market’s Current State
- The July drop of 1.6% is an indicator of slowing wholesale price declines
- we’re now back to the same index value last seen in April 2021
- MMR Retention, which is the average difference in price relative to the current MMR, averaged 98.6%, meaning market prices were below MMR values.
- The average daily sales conversion rate declined to 48.9%. It was 60.1% in July 2019 but July was 2% higher than in July 2022. Dealers are buying.
- With valuations starting to flatline, that has implications for aging dealers’ lots. Growth strategies can be adjusted in this market.
Wholesale / Retail Spread PVR
- With the wholesale price declines softening the spread for the model year 2020 was $3400.
- For luxury, it was approximately $4200, and for nonluxury approximately $3700. The market is still presenting PVR with the right acquisition and retail strategy.
We are moving into a growth market for the fundamentally sound retail dealer. The market is presenting trends that give us a lens through Q3 and Q4 we can build strategic plans around. There are cautions and risks in the market as always so reach out to our team to discuss your current strategy, the market, and then if any adjustments need to be made.