The Automotive Advisor Team

Economic Auto Market Update:

Retail sales rose 0.7% in September, stronger than expected, extending the 0.8% gain in August. It was the sixth straight month with retail spending growth. Retail sales increased 0.6% for the month, excluding motor vehicles and gasoline. Overall, Americans continue to open their pocketbooks, providing some resilience in the U.S. economy amid many challenges. Over the past 12 months, retail spending rose 3.8%, or 4.0% year-to-date growth with motor vehicle and gasoline station sales excluded.

The September data were mostly higher. Consumer spending growth was led by strength among miscellaneous store retailers (up 3.0%), non-store retailers (up 1.1%), motor vehicles and parts dealers (up 1.0%), food services and drinking places (up 0.9%), gasoline stations (up 0.9%) and health and personal care stores (up 0.8%), among others. In contrast, retail sales were lower for clothing and accessories stores (down 0.8%), electronics and appliance stores (down 0.8%), and building material and garden supply stores (down 0.2%).

Retailers with the largest increases in spending over the past 12 months included food services and drinking places (up 9.2%), non-store retailers (up 8.4%), health and personal care stores (up 8.3%), and motor vehicles and parts dealers (up 6.2%). At the same time, sizable year-over-year declines in retail sales occurred for furniture and home furnishings stores (down 5.9%), department stores (down 4.7%), building material and garden supply stores (down 4.0%) and gasoline stations (3.5%), among others.


Retail Sales: Cox Automotive Data

The retail used-vehicle sales estimates based on registration data generally align with the used sales estimates based on observed changes in advertised units tracked by vAuto, a Cox Automotive company specializing in inventory management. This month, the vAuto estimates suggest that used retail vehicles sales volume in September was down 10% compared to August. Volumes were down 2% from a year ago, the worst year-over-year performance since June.


Day Supply: Source: Cox Automotive Data

The total U.S. supply of available unsold new vehicles climbed to 2.21 million units, the highest level since early spring 2021. That is up 60% from the same time a year ago. However, inventory remains 35% lower than pre-pandemic 2019. Inventory numbers include vehicles available on dealer lots and some in transit.

Days of supply stood at 60 at the start of October, the same as the start of September. Inventory, measured as days’ supply, was 14 days higher than the same time a year ago. Supply has been inching toward that 60-day level, which the industry once considered normal and ideal, throughout the year. It was last in the 60s in March 2021.


Used car prices saw a 2.6% decline, which was more than what we have been seeing in retail price declines but catching up with the higher declines we have seen in prior months. New vehicle prices saw an accelerating increase, which we did not see in actual transactions. According to Kelley Blue Book, new-vehicle transaction prices were down in September.

The typical new-vehicle payment declined 0.8%, and the number of median weeks of income needed to purchase the average new vehicle declined to 42.2 weeks from an upwardly revised 42.6 weeks in August. At 42.2, the affordability index was lower than the 42.9 recorded last September by 1.6%.

Compared to September 2022, vans and SUVs lost less than the industry, down 2.3% and 3.5%, respectively. Compact cars again performed the worst year over year, down 9.9%, followed by luxury down 6.7%, and midsize cars down 5.9%. Pickups were up 0.7%, better than the industry and the only positive year-over-year performer. Compared to last month, pickups, midsize cars, compact cars, and SUVs gained more than the industry at 2.1%, 1.4%, 1.3%, and 1.1%, respectively. Luxury lost 0.6% and vans were down 0.9% from August.


Wholesale Market Trends: Source: Cox Automotive Data

Wholesale used-vehicle prices (on a mix-, mileage-, and seasonally adjusted basis) decreased 1.6% from September in the first 15 days of October. The midmonth Manheim Used Vehicle Value Index declined to 211.0, which was down 3.3% from the full month of October 2022. The seasonal adjustment minimized the decrease. The non-adjusted price change in the first half of October dropped 2.2% compared to September, while the unadjusted price was down 5.5% year over year.

The average daily sales conversion rate of 54.0% in the first half of October was above the October 2019 daily average of 52.2%. The conversion rate indicates that the first 15 days of the month saw slightly stronger-than-normal buying demand for this time of year.

Retail Margin Trends:

The daily overall retail margin described as the gap between the cost of acquiring vehicles shown by the blue line versus the vehicle sale price, the orange line, still sits around $3000. The other operational efficiency will determine how much of that 3000 they get to keep. The key here is the profit is still there in the market regardless of current economic conditions and the dealers who have tight acquisition and operational processes are still winning the volume and margin game.


There’s an opportunity to grow market share and avoid heavy aging inventory losses by digging deep into your inventory management program and determining what your market is tolerating as far as retail price and how your acquisition strategy matches that average investment prevent. show just below, you can find deals at an inactive auction to supplement your local buying if you take a surgical approach to your acquisition planning. Reach out HERE, we can help.

Also not being over-indexed in what the market displays as the correct day supply and any make-model trim will help you widen the net and take advantage of growth opportunities in the market. Let our team perform a deep dive on your dealership acquisition plan and vehicle buying activity at no charge an no obligation.

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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