The Automotive Advisor Team

Economic Outlook: Source

In the Auto Market Trends Section this week, we see the Cox Automotive Dealer Sentiment Index (CADSI) reveals a significant decrease in U.S. auto dealer sentiment in Q4 2023 compared to Q3. This decline is attributed to the ongoing adverse effects of high-interest rates and a weakening economy on the automotive market.

The 3-month market outlook index matched an all-time low of 41, indicating more dealers feel the market will be weak, not strong, in the months ahead. This below is what dealers described as the hurdles they face.

BUT as we have been discussing here, the tax season has a lot of promise based on the economic trends we review every week, but it is easy to get dismayed but surveys like this. Determining how you begin thinking and behaving to get ready now for 2024 and grow could determine your profitability then.


Wholesales to Retail Trending: Source / Source

Over the last ten years researching wholesale to retail markets, this pattern below has been predictable and is telling us it’s the time to start getting ahead of the market, in a controlled calculated way by building inventory through tax season. The caution is to always monitor sales rate to make sure you are sitting at an optimal day supply going into that tax season.  (Our tool can set that up for dealers simply and easily. You can see a demo HERE)

We are beginning to see what major retailers are doing right now and it tells a story. (Carvana/Carmax/Drive Time, Echo Park). We don’t want to model their sales methods or inventory strategy but because of what they’re doing in the market we have to be mindful of how that impacts the overall playing field.

Manheim Cox Automotive:

The midmonth Manheim Used Vehicle Value Index rose to 205.5, which was down 6.3% from the full month of December 2022 but was down slightly this week. Lane efficiency is running higher than normal due to more commercial offerings. Used retail and new retail sales trending similarly to previous years. New car days’ supply at 67 as inventory builds.

    • Accelerating some, the 3-year-old index decreased 0.5% to 86.7%. Non-luxury was down 0.5% and luxury decreased 0.7%.
    • Sale prices continue to run lower than MMR (-1.81%)
    • Lane efficiency is currently higher than last year and follows the 2021 trend more closely (largely due to increasing commercial offerings as a percentage of all offerings)
    • Six-week lagged spreads increased due to sharp wholesale declines a few weeks ago.
    • The used retail sales rate is running at a similar rate to previous years. Days’ supply at 48 days.
    • New car sales trended higher than the last two years, but inventory continues to build. Days’ supply at 67.

Black Book Outlook: Source / Source

Black book shows us below that the rate of inventory turn is starting to drop some and we’re seeing that by the next graph showing our retail listing volume decreasing in the market because of the continued softening of the retail price and the third graph below that leads to a shift in the acquisition price of the vehicle as dealers go back to market to buy more cars to sell. This is a telling scenario that leads us into a strategy conversation regarding tax season and where the markets are headed in the next few weeks.


Retail Market: Source / Source

Looking from right to left below you can see the red circle showing how we performed in November of this year, which was slightly better than November of last year, but many dealers felt some pain. It’s kept them cautious but as we see below December’s typically even a little softer than November in the aggregate. But afterwards, show below in the green line, we’re off to the races in January.

Getting ready for that green line acceleration without waiting too long to buy cars and overpaying for them later when we need them is the key to successful 2024 jump off strategy. This is our specialty. We can provide you with the confidence and courage needed to take a very aggressive stance towards what looks to be a decent tax season, but it has to be done with surgical execution. For an explanation and video demo of how, click HERE.


Used Retail Prices are more accessible than in years past, due to the proliferation of ‘no-haggle pricing’ for used-vehicle retailing. Transparent pricing upfront makes the car buying process more enjoyable for customers and allows Black Book to accurately measure retail market trends.

This analysis is based on approximately two million vehicles listed for sale on U.S. dealer lots. The graph below looks at 2-6-year-old vehicles. The Index is computed keeping the average age of the mix constant to identify market movements.

With retail prices steadily but softly declining and wholesale prices still having a split personality, it’s important to watch this each week and pressure test your next steps with proven trusted industry partners.

Used vehicle retail day supply it’s lower than it was this time last year matching 2019 and 2020 numbers. We’re hearing in the market there’s plenty of supply but as you can see below, we’re significantly below 2020 numbers going into tax season which we expect will draw up the acquisition cost of used vehicles up and the retail price should follow 6 to 8 weeks later. The new car availability and the incentives could slow that appreciation just a little, but the supply is usually the driving force of values in an affordably market like this. We will watch it for you each week.

Auto Market Trends Summary: Source

We are beginning to see what major retailers are doing right now and it tells a story. (Carvana/Carmax/Drive Time, Echo Park). We don’t want to model their sales methods or inventory strategy but because of what they’re doing in the market we have to be mindful of how that impacts the overall playing field.

The caution is if a dealer stays too reserved right now due to the behavior over the last 3 months, it could cost significant PVR right in the first half of 2024.

Over the years if the trends are there, dealers who have the facts to back up their strategy with calculated courage, know that what feels like “Overpaying” today is “Underpaying” tomorrow.

The reverse is true too. If you wait and stay slow and cautious, you will likely be overpaying for inventory tomorrow that you could have underpaid for today.

Reach out below if you would like a complimentary review of your inventory and strategy below.



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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