The Automotive Advisor Team

Automotive Market Update 6-6-2024: Buyers Still Buy

 

Economic Source

The fourth-quarter real GDP growth was revised down to a 1.3% annualized increase from an initial estimate of 1.6%. This downward revision also impacted personal consumption, which was adjusted to a 2.0% increase from 2.5%. Real GDP growth year over year was revised to 2.9% from 3.0%.

Personal income growth decelerated, and consumer spending growth slowed in April, coming in weaker than expected.

  • Personal Income Growth: Decelerated to 0.3% from 0.5% in March.
  • Employee Compensation Growth: Slowed to 0.2% from 0.6% in March.
  • Government Transfer Payments: Growth decelerated to 0.3% from 0.8%, with reductions in Medicaid, Social Security payments, and unemployment compensation.
  • Personal Income: The pace slowed after reaching a 5.3% year-over-year gain in June of 2023
  • Personal Saving Rate: March’s personal savings rate dipped to 3.2%.

 

Cox Automotive’s Manheim Wholesales Market Source

Not much change from previous weeks’ trends. Three-year-old wholesale depreciation was 0.4% this week but lane efficiency was flat or increasing, and higher than the same time in 2022 and 2023. Used and new retail sales continue to trend close to 2019 levels and days’ supply moved down a little for both as we progress through the month.

  • The 3-year-old index depreciated 0.4% to 99.2%. Non-luxury depreciated 0.5% and luxury depreciated 0.3%.
    • Wholesale values dropped for most model years.
    • Sale prices below MMR (-1.24%).
  • Lane efficiency flat or increasing some. Three-year-old and 6-year-old lane efficiency both running higher than the previous two years.

 

Black Book: Source

Last week’s rate of depreciation accelerated, showing the largest single week decline since mid-January. The only segments continuing to report stabilization were the Sporty and Premium Sporty Cars.

  • On a volume-weighted basis, the overall Car segment decreased -0.06%. For reference, in the previous week, cars decreased -0.09%.
  • The 0-to-2-year-old Car segments were down -0.05% and 8-to-16-year-old Cars decreased -0.10%.
  • Two of the nine Car segments increased last week.

  • The volume-weighted, overall Truck segment decreased -0.19% compared to the decline seen the prior week of -0.29%.
  • The 0-to-2-year-old models declined -0.22% on average and the 8-to-16-year-olds decreased by -0.20% on average.
  • All thirteen of the Truck segments reported a decline last week.

Retail Trending: Source

  • Retail prices declined 0.2% for non-luxury and 0.6% for luxury. Luxury spreads stabilizing and six-week lagged non-luxury spreads now increasing due to recent wholesale values declining at a higher rate than retail values.
  • The used retail sales rate is trending similar to most previous years; days’ supply is at 42 days.
  • New car sales trending close to 2019 levels and days’ supply at 74 days.

 

Summary: Source

As measured by the Conference Board, consumer confidence increased by 4.6% in May due to improvements in both present and future outlooks. However, consumer confidence was still down 0.5% year over year and vehicle purchase plans are unchanged compared to April and May last year. The market is tight, but consumers are still buying, and the right strategy can make this a banner year for your dealership.