Each week, John Ellis and the Automotive Advisor team keep us up-to-date with the latest moves in the market. Let's dive into the most recent developments:
🎠Economic Insights — Second-quarter real GDP growth has been revised down to a 2.1% YOY increase, highlighting economic fragility. While income losses remain minimal and August job growth surpassed expectations, there is a sense of unease among workers, particularly those with higher incomes. Consumer spending, on the other hand, is gaining momentum.
🪧 Union Negotiations & Supply Chain Risks — Ongoing contentious union negotiations pose potential disruptions to the North American vehicle supply chain.
📈 New Car Trends — The average days' supply of new vehicles in the U.S. currently sits at 58 days, the highest in two years. Though new car sales experienced a surge, the pace is beginning to level out.
📉 Used Car Trends — Used car sales continue to exhibit steady growth, fueled in large part by declining prices.
🔋 BEV Trends: BEVs are projected to account for 8% of August’s sales, in line with July’s figures. Ford reported a 61% growth of the Mach-E while Hyundai reported an 80% YOY growth of its hybrid and electric vehicles.
💪 Wholesale Market Stability — Wholesale markets are stabilizing, especially concerning three-year-old models, which benefits acquisition strategies. This equilibrium extends to the broader wholesale channel, as indicated by the stabilization of the two to six-year-old vehicle Black Book Index.
🚧 Market Softening and Challenges — While there's a robust YOY growth of 17% in August, the MOM increase is a more modest 3%, signaling potential market softening. Daily selling rates are experiencing a mild descent, and inventories have surged by 57% compared to mid-August 2022.
🤑 Financial Considerations — Rising interest rates and concerns about new vehicle affordability require close monitoring. Dealer-advertised inventories have remained steady at approximately 2.3M units since July.
