The Automotive Advisor Team

Economic Update:  Source

Consumer sentiment dropped again last week. Morning Consult’s report shows that interest rates and higher gasoline prices are driving that trend. Below we show the crop job quotes are slowing but we still have a tighter job market than we’ve seen historically. With wage growth outpacing inflation since April of this year, there’s still momentum in the market to keep the economy moving forward.

Retail Sales Trending  Source

October’s total new-light-vehicle sales were up 1.5% year over year, with one less selling day versus October 2022. By volume, October new-vehicle sales were down 9.6% month over month. The October sales pace, or seasonally adjusted annual rate (SAAR), came in at 15.5 million, an increase of 5.6% from last year’s 14.7 million and down 1.2% from September’s 15.7 million pace.

Used-vehicle retail sales in October were down 2% compared to September, and the year-over-year comparison with 2022 worsened again. Used retail sales are estimated to be down 4% year-over-year in October. The average retail listing price for a used vehicle declined 0.7% over the last four weeks.

Day Supply: Source: Cox Automotive Data

The day supply for the new show bottom left is trending up significantly from week 41 to 45. Build-up pre-strike and affordability have helped that trend. The used supply has stayed very steady over the last 35 to 45 as the sales rate has also stayed steady during the same time period.

Retail Price Trends: Source

In every other category, the change in price month-over-month was not much more than about $100. That suggests prices have stopped falling. Whether they’re going to bounce back or remain stagnant likely depends on where interest rates go next and the ongoing United Auto Workers strike. Changes to average prices in other segments:

  • Vans & Minivans are down $150 over last month.
  • SUVs and Cars (sedans, coupes, and wagons) are down by roughly $100. Consumers looking for a deal on any vehicle should consider a used sedan, coupe, or wagon. Their price range starts at around $6,000, making them the most affordable category.
  • Hybrid and EV prices seem to have bottomed out and are down only about $85 from last month. They’re still down the most of all vehicles from a year ago, about 17.5%.


It seems clear we’re approaching a leveling-off period. The strike has put some pressure on inventory, but consumer demand is lower because of those high interest rates.


Wholesale Market Trends: 

In October, Manheim Market Report (MMR) values saw above-average weekly declines that peaked in intensity in the middle of the month. Over the last four weeks, the Three-Year-Old Index declined by 3.6%.

The average daily sales conversion rate dropped to 52.9%, which indicates that demand has declined but remains at a decent level for this time of year.  

Auctions sales show efficiencies below are different by geography and can point to some targeted buy plan strategies if executed correctly. Look below and reach out for a deeper dive.


Affordability: Source

Higher interest rates are counterbalanced by a growth in sales incentives by the manufacturer. New car sales are still in our state of unaffordability, but these conditions created by the OEM can help.

Retail Margin Trends:

This spread between retail and wholesale continues to widen as this week shows another $3500 plus gap between the wholesale price of a car and the retail sales price of a car. The luxury and non-luxury to the right show the same differential. The opportunities to create profit in this market are dictated by your ability to buy at the right time and the right inventory to match your market. Reach out for a strategy discussion on how we help our dealers do just that.


Summary: Source

In this current market, there’s gross to be made but departmental growth is our focus. Being in a highly depreciable market all acquisition channels are losing value the minute we take ownership. We can certainly increase velocity in this market by strategic acquisition strategies that match demand. However, my good friend Brian Kramer and I both agree that markets determine front-end gross, and processes and efficiencies determine back-end gross. Control your controllables. Your focus now is to grow departmental gross profit not holding for front-end gross profit. Waiting on five pounders will cost you 10 pounders all day in a market like this.



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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