The Automotive Advisor Team

Auto Market Update: Economic Outlook: Source

  • For this week’s auto market update, we will be staying on next year’s interest rate outlook a little longer, things are slowing in the labor market, it’s not enough to cause a panic about unemployment. The October jobs report — with the economy adding just 150,000 jobs and the unemployment rate ticking up to 3.9%
  • Over the past three months, average hourly earnings for all employees have jumped 3.2% but the biggest risk to our stability is that the softening of the job market could turn into a serious downturn.
  • The unemployment rate is already above the Fed’s year-end forecast of 3.8%, the first time that’s happened since March 2022.
  • If it looked like the jobless rate might surpass the Fed’s year-end 2024 prediction of 4.1%, that would open the door to interest-rate cuts relatively quickly.

Retail Market Trending: Source

  • Below you can see the separation between the sale price of used cars and the buy price of those used cars approximately $3700. As mentioned earlier, the appreciation and the non-luxury is stabilized and where the luxury is not, which can be shown in the smaller graphs to the right. This has implications not only for bias strategy but also for retail strategy.


  • The black book shows the retail price index is continuing to soften as is shown above and the losing volume has plateaued to the average normal, we’ve seen since week 25. That just tells us there’s plenty of inventory in the market and there are deals to be had but all inventory doesn’t behave the same.



  • Finally black book shows the days to turn has increased significantly over the last month and 1/2 from a low of 42 days to turn this week sitting just at 56 days to turn. That’s a 14 day increase in how long the average vehicle takes to leave a dealer’s lot. Significant implications on turn, age holding costs and retail price strength. This is why we have to focus on all areas of dealer operations to determine the best strategy for fastest turn not focused on the deal profit but on departmental profit. The automotive advisory team can help. Let us analyze your dealership today.


Wholesale Market Trends: Source

 Week over Week Summary

  • Continuing to decelerate, the 3-year-old index decreased 0.1% to 87.4%.
  • Non-luxury flat and luxury down 0.4%
    • Luxury: Luxury cars down 0.5%; SUVs down 0.3%
    • Non-Luxury: Compact cars flat; Midsize cars up 0.2%; Midsize SUVs up 0.7%; Entry SUVs down 0.2%
    • Pickups down 0.4%
  • Lane efficiency rebounded after Thanksgiving week, up 8.0% pts to 58.4%.

Year over Year Trends:

  • Pickups, SUVs, and vans lost less than the industry’s year-over-year decline of 5.3%, at 4.2%, 4.8%, and 5.0%, respectively.
  • Compact cars continued to slide, down 10.7%,
    • Midsize cars were off by 8.0%, and
    • Luxury lost 6.1% year over year.
  • Pickups lost 2.8%, midsize cars were down 2.1%, and SUVs were equal to the industry, with a 1.6% decline.
  • Compact cars and vans, down 1.3% and 0.7%, lost less than the industry in month-over-month declines.


Below to the left, you can see the 2023 dotted blue line shows wholesale value trending looks to be following 2019 end-of-the-year performance. Orange line. The curve has started to shift towards a leveling off since late November and looks to continue that trend to the end of the year.



In the bottom two graphs, you can see that nonluxury inventory is stabilizing while luxury inventory is continuing a severe decline. Speculation says that has a lot to do with affordability and market economic conditions and less with desire.



The top right graph shows the separation between lane efficiency and MMR. The price of vehicles starts to drop significantly typically dealers are selling off which also drops efficiency. However, in the last several weeks the price of inventory has been dropping significantly and dealers have been buying that inventory in heavy volumes as you can see with the red lines separating so severely from the blue line in the bottom right. That’s a dangerous trend and must be surgically attacked with very strategically calculated goals.


Taking that information, a little deeper you can see below in the graph the left map shows the sales efficiency by geographical region. The right shows the MMR rate by geographical region. Matching these together as a buyer you can certainly see that in the pink and red areas to the left, the activity is very low which correlates to the pink areas to the right where the price retention is also low. Finding deals in these red and pink markets will be much easier.



Service Market Trends: Source

5 Key Takeaways KEY TAKEAWAYS for 2024

  • THE SERVICE MARKET IS A GROWTH OPPORTUNITY: Americans are going back to normal with more driving, while service costs continue to increase.
  • DEALERS ARE #1 BUT LOSE SHARE TO COMPETITORS: Consumers trust dealerships less, and dealerships are no longer the most preferred service provider.
  • FRUSTRATIONS WITH SERVICE ARE MOSTLY DRIVEN BY COSTS: With service costs on the rise, price transparency can alleviate fears, and improve customer relationships.
  • DEALERS ARE PREPARING FOR AN INCREASE IN EV SERVICE: Dealers understand the need to transition their fixed operations to support emerging technologies, train technicians, and add service infrastructure.
  • STICKER SHOCK AND LONG WAIT TIMES SURPRISE EV OWNERS: Dealers can build trust with EV owners by offering transparency in pricing and wait times.


  • Used cars are showing a significant decline in bank financing and a larger rate of growth from credit union financing since late 2021. Difficult to structure the car deal with the back end profits needed to offset some of the aging inventories cost to frontline.


  • Looking at the right of delinquencies is starting to rise even prior to the 2019 Cove. That has to do with the economy and affordability issues in all sectors of consumer spending. Finding opportunities to finance in ways that reduce exposure to chargebacks will require creative thinking and a diverse set of inventory price bands on your lot.


EVs: Source

  • EVs are playing a critical role in the future of automotive retail and there’s good reason for dealers to be excited. Looking at Fixed Ops this week, you can see from the Cox Automotive study below that service visits and the number of lines per RO both increase with EV ownership. Just as important is the growth in franchise service visit adoption/retention. All signs that learning about EV Fixed Ops today will be fruitful tomorrow. Reach out to the team for more information HERE.


The current market is continuing to show areas of volatility that require weekly and certainly monthly. The feds have confirmed that if the unemployment rate keeps ticking up, they will reduce interest rates next year to keep everything in balance and that’s good news. We also see that the rate of valuations for non-electric vehicles are starting to plateau meaning the inventory under lot consistently throughout the month while the acquisition cost starts increasing. This is not the same for luxury vehicles and needs to be noted in your acquisition-to-retail strategy. Turns have increased from 46 days to 56 days in the last 12 weeks according to black that gives us a lens into how efficient we need to be getting our vehicles to the front line at the right price and reduce age that deteriorates departmental growth. Our program at the automotive advisor analyzes all of this for our dealers and set the plan in motion for long term success. Reach out HERE if you’d like us to do a free analysis of your operations.

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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