The Automotive Advisor Team

Economic Update: Source

People are working and earning income. The labor market tightness index reveals that the US labor market is gradually becoming less tight, despite still strong job growth. However, it’s still tighter than any period in the half-century before the pandemic. Reasons for wage growth:

  1. Many people are changing jobs.
  2. When there is a mismatch between the number of open positions and the number of available workers.
  3. If many people are employed and feel secure in their ability to find a new job and aren’t actively looking.

All of these indicators typically favor inactivity by the Fed to stimulate the economy and reduce interest rates.



UAW and Ford Strike a DEAL!!! Source

  • The United Auto Workers has reached a tentative agreement with Ford on a four-and-a-half-year contract.
  • The 25% general wage increase is more than Ford workers’ total pay rise between 2001 and 2022, the UAW said.
  • Temporary workers at Ford are set to see their pay increase by two-and-a-half times.

All good news for the industry, Ford, and for the other two that have a roadmap to bring an end to their strike.



Retail Sales: Cox Automotive Data

Early estimates based on vehicle registration data show total used-vehicle sales in September decreased 3.2% from August to 3.0 million units. Retail used-vehicle sales also decreased month over month in August. You can see those trends in the top three graphs below. Looking at the market more surgically you can see that medium-duty and heavy-duty trucks that normally hold strong are declining in sales as well.


Day Supply: Source

Day supply of both new and new used vehicles seems to be steady and up for the new segment. The graph at the very bottom shows the impact the UAW strike is having on the big three. Their future day supply projections can be pulled from this deficit to forecast a declining landscape in the next few months. The impact that we’ll have on used car supply should start showing in the next several weeks.

Pricing SOURCE

The overall used retail price maintained below 2022 levels all year. The % rate of growth between the wholesale index and the retail index just below shows that the wholesale index is declining faster than the retail index which you should continue to drive healthy margins.


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

The wholesale market for the three-year-old model index is continuing to climb week after week while the two to six-year-old price index for black book has been steady for the last few weeks. This suggests the highest-priced inventory that’s in the smallest supply is the most unaffordable in the market and looks to be less attractive to dealers for stocking. The very bottom graph shows the auctions by geography that are seeing an uptick in activity, plateauing, or even declining in activity by color code. They suggest a strategic play to be had here when looking to acquire inventory from certain areas. Keep an eye on this chart weekly.

Retail Margin Trends:

The retail market index from vAuto in the orange line below continues to separate from the MMR index line in the blue showing profit potential expanding currently. With the slowing of sales rate, many dealers are not seeing the same profit because of aging inventory. However, flipping your inventory within the first 30 should realize the profit potential given by the market shown below.


Wholesale values decreased in the first half of October after showing a bit more strength in September. Manheim’s days’ supply has been steady in the first half of the month though it is lower than last year. MMR Index values have accelerated their declines in the last couple of weeks, declining at rates typically not seen at this time of year. Used market supply remains tighter than last year, and prices are holding relatively steady overall. Monthly Loan Payments have continued to increase as higher rates continue to impact affordability. Loan defaults are up vs 2022 overall. Looking under the hood, we need to understand how defaults are moving in different credit tiers to determine our dealership’s best investment strategy to meet affordability. Reach out to the team to discuss your dealership HERE.