Consumer spending decelerated and was weaker than expected. But, Personal income growth accelerated to a 0.4% gain and the personal savings rate increased to 4.6%, which was the highest since January 2022. This data points to consumers who have money but are paying off debt and building back savings as a primary goal. Spending on housing and vehicles is more of a need than a want in the aggregate so a lead or a shopper is more valuable now than ever before.
New Car Outlook
New car sales are as running close to 2019 sales but despite the news about new car supply, we are still running well below 2019 and 2012 levels and that is impacting used car trades. We need more new cars.
Used Car Outlook:
The sales rate is still trending close to 2019 with day-supply within below the normal range at 40. Days’ supply dropped at the end of June for all three segments and the acquisition rate still running higher than the sold rate.
Wholesale Outlook: The 3-year-old indexes depreciated 1.0% to 98 .7%. Both non-luxury and luxury decreased by 0.9%. All model years depreciated week over week. Sale prices continue to run further below MMR (-2.47%). Lane efficiency dropped for both 3- and 6-year-old models but ran ahead of 2023 MY.
Retail Spread: Wholesale to Retail Value Summary:
- 2020 model year non-luxury wholesale values decreased by 0.9%; retail values decreased by 0.5%.
- 2020 model year luxury wholesale values decreased by 0.9% and retail values decreased by 0.6%.
- Although retail values dropped at a higher rate last week, spreads continue to improve as wholesale values have dropped more sharply than retail values.
The market is slow and steady and the retail price is starting to reflect that. However, so is the acquisition market, and that value is declining almost 50% faster than the retail market. This spells good news for dealers and shoppers with used vehicles not increasing but decreasing eventually making them affordable to more buyers.
The economic conditions are not stellar but the bright spots mentioned above, higher wages and consumers saving more, means the future is bright. The key right now is every lead, every shopper every up is gold. If they are attempting to buy, they are more serious than in the past. Don’t let them slip away to another dealer. The law of averages is not on our side in this market.