The Automotive Advisor Team

Economic Update: Source

The average American now needs 42 weeks of income to pay off a new vehicle as compared to 33 weeks before the pandemic. How will a UAW strike impact that? The impact on the new car market may be weeks in the future but looking at the daily supply of inventory by manufacturer can give us the lens into which ones will have the most MSRP inflationary risk.

 

 

New Day Supply: Source: Cox Automotive Data

The new car they supply is sitting around 57 days total but the implied days to be sold meaning the turn for new cars is slowing approaching 60 days. Affordability has something to do with that obviously but also the economy itself. Take a look below for more.

 

 

Used Day Supply: Source: Cox Automotive Data

The used car day supply of outstanding inventory is sitting around 45 days while the average day-to-sell, turn is 40 days. With retail prices staying stable in the market what happens to the wholesale price in the next couple of weeks could change both of these metrics. Take a look below for more.

 

 

Wholesale Market Trends: Source: Cox Automotive Data

For the time being the wholesale market is seeing a stabilization in the three-year-old price index with the volume of inventory staying stable as seen in the first two charts below. The last chart shows you a heat map of the efficiencies at auctions across North America along with the price strength measured by MMR retention. As you’re looking to auctions to acquire vehicles this is a good way to judge how easily vehicles can be obtained and how much you have to pay to obtain those vehicles. Take a look below.

 

 

Acquisition Market Trends:

The cost of acquiring inventory versus the the price of retail is starting to stabilize with the difference from this week to last week only being a few $100. This market is prime for a volume strategy but the UAW strike may put a monkey wrench in that very quickly. We’ll know more in the next couple of days. Take a look below at the market stability and keep watch over the last two weeks.

 

 

Summary:

With the retail price staying stable and the wholesale price poised for an increase, watching dealer demand and the impact of speculation on the UAW strike will be important over the next two to three weeks. How long the strike will last will be anybody’s guess but the longer it goes on the more inflationary effect we’re going to see in our automotive market. Reach out to the team for insights and guidance here.