The Automotive Advisor Team

Economic Update: Source

The UAW strategy is to target the three automakers at once, beginning with work stoppage at three plants in three states and then expanding. The strike expanded to 38 GM and Stellantis plants in 20 states on Sept. 22 and to additional GM and Ford plants last Friday.

With General Motors Co. setting up a $6 billion line of credit to shore up liquidity, a move indicating the carmaker is preparing for a strike at US plants that may drag on with costs already reaching $200 million, the strike could last longer than we hoped, and an extended strike could lead to another inventory shortage and a rise in prices in an already slowly recovering supply environment.  

New vehicle prices may rise by less than 2% if the strike lasts about two weeks and everyone’s going to see higher prices regardless of the company you buy from if the strike continues for more than two weeks,” said Tyson Jominy, vice president, data and analytics at J.D. Power.

According to Cox Automotive, the Conference Board Consumer Confidence Index fell by 5.2% in September, as future expectations plunged 11.5% but views of the present situation increased by 0.3%. Consumer confidence was down 4.5% year-to-year following two back-to-back months of decline and plans to purchase a vehicle in the next six months declined but remained up from last year.

New Day Supply: Source: Cox Automotive Data

Third-quarter new vehicle sales are forecast to finish higher year over year after a strong September while the United Auto Workers strike against Ford Motor Co.General Motors Co., and Stellantis NV has looming implications on supply and pricing. New-vehicle sales in the third quarter are projected to reach 3.9 million units, an increase of 15.5% YoY as September sales are expected to be up 13.9% YoY to nearly 1.3 million units, according to Cox Automotive.  Supply is remaining healthy overall as seen in the graph above but the below graph shows that is not the case for every OEM. Know your day supply to know your reatil strategy plan in Q4 and Q1 of 2024. It will be impacted.

Used Day Supply: Source: Cox Automotive Data

The used-day supply is down 10% year over year with supply levels trending below the last four years. The middle graph shows the retail used volume in sales over the last 12 months and that we have been trending steady and up most of the year and are still equal to or greater than 2022 sales rates. The sales rate should stay strong for used cars in the remainder of 2023 but the buy and sell price will be impacted. 


Wholesale Market Trends: Source: Cox Automotive / Black Book Data

Manheim MMR index in the top graph is showing a slight depreciation in used car values for the three-year-old model year but the black book weekly price index is showing a trend back towards flat and a slight appreciation for the two to six-year-old year models. The likelihood of this occurrence happening in this market is pretty strong considering affordability is the factor at play. The two to six-year-old index from black book represents older vehicles that are at lower price points in the auction lanes and more desirable for consumers and dealers currently. Because of that desire demand is increased and the price is likely following. Don’t get these two confused or it can cost you. The bottom graph shows the speed of sales in the market and currently, the average days to turn is around 40 days. Know that beating that is called “taking market share”. Let’s go WIN!


Acquisition Market Trends: Source

Segments are starting to have movement between the different categories so keep an eye on demand for each understanding some you can underpay for substantially and some you’ll have to pay up for. At the end of the day, the market demand is all that matters, and looking at your strategy page in your inventory management tools, like VinCue, will be the key to your success.


Used Retail Margin Trends:

In the 2020 year model, the acquisition costs are trending down just slightly leaving the PVR gap somewhat healthy. Of course, this is a collection of buy and sell indexes and doesn’t account for all the other costs associated with acquiring and selling vehicles but the gap trend is one input in determining our pricing, sales, and stocking strategy. You can find more info on that HERE. Currently, it’s steady as she goes.


The market shows us that lower price point vehicles are in higher demand than late model inventory which has an affordability issue in the used car market. Looking below it’s easy to understand that inventory is aging pretty quickly and vehicles in operation are segmented quite strongly between Cars and Trucks / SUVs. Understanding which way the market is going both in supply and demand will help dealers stay ahead of the curves in this tightening economy. Reach out to the team HERE if you would like to dig deeper into your strategy and indexes to formulate a solid plan of execution for the remainder of the year.