Navigating Toward Success

As we roll into the last month of the quarter, the Automotive Advisor gives us all the deets on the industry so that you can set yourself up for success for the remainder of the year. Here’s what you need to know:

🛍️ Economic Mixed Bag:

• Economic sentiment surged to its second-highest level in 21 months.
• The unemployment rate rose slightly to 3.8% in August.
• The labor force participation rate increased slightly to 62.8% after being flat since March.
• Consumer sentiment dips along with stock prices as gas prices and interest rates continue to rise.

☝️ Sales Trends Point Upward:

• August witnessed a substantial 19% YOY surge in sales, a testament to pent-up demand in the market.
• New vehicle sales are on the upswing, increasing by over 3% in August. Pent-up demand from consumers and businesses, especially in the form of rental fleets, continues to be fulfilled as new vehicle supply and pricing improve.
• The used car market maintains its strength, with a remarkable 9% increase in sales compared to last year.

👷 Wholesale Market Dynamics in Flux:

• Hinging on the outcome of the UAW strike, the wholesale market is on the brink of significant appreciation, especially for 2020-year models.
• If the strike happens or lingers until the deadline, we could see even more used car appreciation. Even a looming strike is enough to make the key players nervous.

🚧 Challenges to Profitability:

• Margin erosion is a growing concern — notably affecting 2 and 3-year-old models. This decline is impacting both luxury and non-luxury segments, translating into a dip in profitability.
• Don’t panic. Dealers are urged to maintain adaptability and flexibility in their strategies during these uncertain times. Navigating the opportunities and challenges that lie ahead will require keeping a close eye on the turbulent market dynamics (psst…that’s what we’re here for 😉).