The Automotive Advisor Team

Automotive Market Update

Consumers are Confident but Tight with Spending


Economic Source

There has been an upward revision of the first quarter’s real GDP to a 1.4% annualized increase from the previous estimate of 1.3% with consumer spending growth saw a slight acceleration to 0.2% in May, though weaker than expected.

·        Consumer spending growth accelerated to 0.2% in May.

·        Personal income growth quickened to 0.5% from 0.3% in April.

·        Employee compensation growth also accelerated to 0.6% from 0.2% in April.

Although consumer confidence dipped 0.9% in June, consumer confidence declined 1.3% in June compared to May but was up 6.2% year over year.

Manheim Wholesales Market Source

  • Decelerating, the 3-year-old index depreciated 0.2% to 96.4%. Non-luxury depreciated 0.1% and luxury depreciated 0.4%.
    • Wholesale values dropped for all model years.
    • Sale prices still below MMR (-1.55%).
  • Lane efficiency increased some week over week and continues to run ahead of the last two years

Black Book: Source

Here is a quick recap of industry-related headlines over the last week:

  • The market depreciation rate continues to surpass pre-pandemic seasonal trends, which averaged less than a quarter percent per week.
  • Currently, the rate of depreciation has consistently hovered around half a percent per week throughout most of June.
  • On a volume-weighted basis, the overall Car segment decreased -0.53%. For reference, in the previous week, cars decreased -0.62%.
  • In the last week of June, the auction conversion rate peaked at 57%, marking the highest rate achieved for the month.
  • The estimated Used Retail Days-to-Turn is rising and is now at 45 days.

Retail Trending: Source

  • Retail prices declined 0.2% for non-luxury and 0.5% for luxury. Spreads improving due to steeper declines in wholesale values.
  • Used retail sales dropped and days’ supply increased as the CDK cyberattack impacted data. Sales rate starting to increase.
  • Similar to used, new car sales dropped, and days’ supply increased as the CDK cyberattack impacted data. Sales rate starting to increase.

Summary: Source

The used car market continues to depreciate during the second half of the summer selling season while the rate of retail price decline is moving closer towards that depreciation. Vehicles have less front-end gross as seen in the Wholesale to Retail spread published by DealerTrack and Manheim this week.

Coming off the heels of the CDK cyber-attack that slowed sales rates in the market over the last couple of weeks, we should see a lift in sales but don’t let that trick you into thinking holding for more gross is the best 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.

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