Auto Dealer Today’s Post

As you head to the polls in Maryland for the primary, here's what Smoke the economist at COX automotive is telling us about the automotive market. The average used auto loan rate has decreased to 13.98%, whereas the rates for new vehicles are slightly higher at 9.86%. There has been a notable reacceleration in consumer spending this year, primarily driven by services and travel sectors, whereas goods and retail sectors showed weakness. The Index of Consumer Sentiment from Morning Consult experienced a slight decline, dropping by 1.6% in April and further by 0.4% in May, indicating volatile consumer confidence levels. https://lnkd.in/eTP293Xk

The recent Federal Reserve decision to cut its benchmark rate target by half a point may lead to increased demand for auto purchases, as consumers have been hesitant to buy due to high interest rates and prices. However, the impact of the rate cut may be delayed and electric vehicle buyers and younger consumers are among those most sensitive to interest rates. Key takeaways: - The half point rate cut by the Federal Reserve may nudge consumers back into showrooms for auto purchases. - Interest rates have been a major hindrance for auto dealerships, with 67% of dealers citing it as a challenge in a recent survey. - A Fed rate cut would likely cause 64% of consumers surveyed to change the timing of their next vehicle purchase. #NNNPro #Dealership #Capital

Car repossessions surge in 1st half of 2024 to highest levels ever (exceeding the peak in 2008 during the Global Financial Crisis. While an overall ominous sign for the economy, for the Tier 1+ manufacturers supplying into the automotive market this mean aggregate demand will not improve, and the higher end luxury unit demand that has been holding will likely be the only reliable demand. Additionally, this is a strong indication of an inferior market demand condition that will allow suppliers with larger presence in aftermarket automotive space as people are forced to replace newer cars with older ones. #b2b #b2bmanufacturing #manufacturing #automotive #forecast #demand https://lnkd.in/gHJ-Ffrh

The US automotive repossession situation is worsening. For manufacturers in the space, avenues for tapping into an inferior market condition (parts for older vehicles) should be investigated where possible. #b2b #b2bmanufacturing #manufacturing #automotive #forecast #economy #recession

Cox Automotive recently shared insights revealing that the U.S. auto market is expected to return to more stable conditions by 2024, suggesting a shift towards normalized inventory levels and pricing strategies. An interesting prediction notes that new vehicle sales are anticipated to climb back up, driven by improvements in supply chain constraints. This return to normalcy hints at potential opportunities for dealerships and buyers alike. The increased availability of vehicles could help ease the current inflated pricing trends to more sustainable levels. However, it also poses questions about how industry players will adapt to changing consumer demands and technological innovations in the marketplace. What are your thoughts on how this shift might influence buyer behavior and the industry's approach to meeting evolving needs? https://lnkd.in/ggWX8DXf

A mix of factors is putting vehicle purchases within reach of more consumers, according to the latest affordability data of Cox Automotive: https://loom.ly/oijZheQ #Affordabilityup

We've definitely seen a steady increase in vehicle pricing over the past few years. With inflation hitting consumer budgets hard, do you think we'll see a price correction sooner than later? Or, will the lower rates and flexible financing options we are beginning to see be enough to bring buyers back?

We've been talking a lot about Market Based Affordability. While we expected the rate cuts to have an impact, we are seeing a slow trickle throughout the lending ecosystem. According to Cox Automotive Inc.'s Vehicle Affordability Index, it still requires 36.2 weeks of average income to afford a vehicle. Per the article: - New-vehicle affordability was unchanged in September, as various factors offset any potential benefits for consumers. - The number of weeks of median income needed to purchase the average new vehicle remained steady at 36.2 weeks, following a slight upward revision in August. - The typical payment in September increased 0.2% to $740. Source: https://lnkd.in/g7QUdBHi All signs point to affordability continuing to be a challenge in the space. You can learn more about how Carmatic can bring you the insights to do something about this challenge. https://lnkd.in/g5HYbTpr

Are rate cuts the only way to get auto sales back up? Given how expensive the auto market has gotten, it would probably help. We've seen prices come down from the mania of the pandemic, however does anyone else think that they are still obscenely high? I continue to drive my old car partly because I can't bring myself to pay what dealerships are actually asking for a new or a used car. I feel as though lowering rates and making payments cheaper for more expensive cars is just rewarding the industry for charging insane prices. The cyber attack last month didn't help sales, but we've also seen inventories rise for new vehicles as evidenced by the return of some financing and cash back incentives. Is this a revolt by consumers who don't want to pay sky high prices on top of sky high interest rates? Or just a normalization of inventories after supply chain issues? I hope it's the former, but that doesn't really seem to be the case. "High prices, high interest rates and a cyberattack: Americans have had plenty of reasons to avoid car dealerships lately. It is testimony to the strength of the economy that more consumers aren’t being put off." "New-vehicle sales clocked in at a seasonally adjusted annualized rate of 15.3 million in June, according to data provider Wards Intelligence. That was lower than forecasts—probably because many dealers’ IT systems were hit by a hack perpetrated against software supplier CDK." "Fueled by shortages, new U.S. vehicle prices peaked at roughly $50,000 at the end of 2022, according to Cox Automotive data. As supply has normalized and interest rates have risen, they have slipped to roughly $48,400, with no end to the decline in sight. Still, that is well above prepandemic levels. Discounts to sticker prices offered by manufacturers likewise continue to creep up, but they remain modest by historical standards." "While the car market has held up better than many expected in the face of the highest interest rates in a quarter-century, signs of consumer caution abound beneath the surface. Only rate cuts from the Federal Reserve seem likely to shift sales into a higher gear." #autos #rates #inflation #federalreserve https://lnkd.in/g3C2sJ47

We've been talking a lot about Market Based Affordability. While we expected the rate cuts to have an impact, we are seeing a slow trickle throughout the lending ecosystem. According to Cox Automotive Inc.'s Vehicle Affordability Index, it still requires 36.2 weeks of average income to afford a vehicle. Per the article: - New-vehicle affordability was unchanged in September, as various factors offset any potential benefits for consumers. - The number of weeks of median income needed to purchase the average new vehicle remained steady at 36.2 weeks, following a slight upward revision in August. - The typical payment in September increased 0.2% to $740. Source: https://lnkd.in/g6bvjiaH All signs point to affordability continuing to be a challenge in the space. You can learn more about how Carmatic can bring you the insights to do something about this challenge.  https://lnkd.in/gC9PxZZR